tag:blogger.com,1999:blog-61949778437647996412017-08-12T10:09:27.556-07:00R&D Management BlogChallenges, best practices and trends in R&amp;D ManagementSandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.comBlogger281125tag:blogger.com,1999:blog-6194977843764799641.post-14566163075276789622012-12-05T04:12:00.005-08:002012-12-05T04:12:40.924-08:00New blogHello All,<br />
<br />
New content will appear on my new <a href="http://blog.inspird.com/">blog</a>: http://blog.inspird.com. &nbsp;I look forward to your comments.<br />
<br />
While you are at it, please check out our new <a href="http://inspird.com/">website</a> as well.<br />
<br />
SandeepSandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-8657649891168024562012-07-22T17:55:00.000-07:002012-07-22T17:55:26.031-07:00Yahoo!'s new CEOSorry I have been gone for a while - starting a business requires a lot more effort than I had thought. &nbsp;The rewards more than make up for effort, but some important things like this blog get dropped along the way...<br />
<br />
A quick post about&nbsp;<a href="http://us2.campaign-archive1.com/?u=996d3c0b33bb141e0cf56a1a0&amp;id=0e302fa51a&amp;e=dbc10e5bab">Yahoo!'s new CEO</a>&nbsp;from INSEAD Knowledge. &nbsp;The article provides many interesting facts about the new CEO, however one stands out:<br />
<blockquote class="tr_bq">
"Some Googlers who worked with Mayer found her <a href="http://www.businessinsider.com/the-truth-about-marissa-mayer-she-has-two-contrasting-reputations-2012-7?utm_source=twbutton&amp;utm_medium=social&amp;utm_campaign=sai">style abrasive and her pace hard to sustain</a>. In her early years, apparently, her interpersonal skills were inferior to her user focus <b>and technical prowess. Many engineers relished working for her nevertheless, and her management skills improved with experience</b>"<span style="background-color: white;">&nbsp;</span></blockquote>
The key points here is that R&amp;D teams are willing to put up with a lot of hardship as long as the leaders are <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology.html">engaged in the development</a>. As long as the leaders are able to provide the teams with a <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-long.html">long-term vision</a>, progress can be made. &nbsp;Finally, leaders need to provide <a href="http://rdmanagement.blogspot.com/2012/02/necessity-is-mother-of-innovation.html">challenges that the teams can</a>&nbsp;utilize to innovate. Each of these themes we have discussed many times on this blog.<br />
<br />
The media frenzy about Mayer's appointment, however, requires some examination on our part. &nbsp;The author of the article has summarized it so well, I have reproduced it below (even though it is not quite related to R&amp;D)<br />
<blockquote class="tr_bq">
The lessons we must draw from this exceptional event, which reveals less about Mayer and Yahoo! than it does about our norms, is the following: Leaders, especially such visible ones, have to accept constant and ruthless scrutiny that won’t stop at their results. Followers, opponents and observers will always question their motives and lives. And they will account for the leader’s story in ways that reveal and serve their interest. Good leaders know it and work with it.<span style="background-color: white;">&nbsp;</span></blockquote>
<blockquote class="tr_bq">
At the same time, we must take this opportunity to scrutinise, for once, not just the leader but also ourselves. To cast a light on the ways in which the stories we tell about our leaders - the patterns of thinking and feeling, actions and talk, which we take for granted - affect the efforts and opportunities to lead of those who appear different from us, and may not be as different as we make them to be.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-60502473316319092172012-05-07T00:30:00.000-07:002012-05-07T00:30:26.241-07:00Amgen CEO: Why I’m a listenerMcKinsey Quarterly has an interview of Amgen CEO Kevin Sharea (<a href="https://www.mckinseyquarterly.com/Governance/Leadership/Why_Im_a_listener_Amgen_CEO_Kevin_Sharer_2956">Why I’m a listener: Amgen CEO Kevin Sharer)</a>&nbsp;where he emphasizes the importance of listening for leaders. &nbsp;We have talked about listening a couple of times in the past (<a href="http://rdmanagement.blogspot.com/2012/02/executives-guide-to-better-listening.html">here</a> and <a href="http://rdmanagement.blogspot.com/2012/03/how-to-become-better-leader.html">here</a>). <br />
<br />
He says that the best way to listen is to do so with just one objective - comprehension. &nbsp;It is important not to be focused on criticism or arguments for or against what the other person is saying.<br />
<blockquote class="tr_bq">
"“Because I learned to listen.” And I thought, “That’s pretty amazing.” He also said, “I learned to listen by having only one objective: comprehension. I was only trying to understand what the person was trying to convey to me. I wasn’t listening to critique or object or convince.”"</blockquote>
Listening for comprehension can also help demonstrate respect and teach your team to be <a href="http://rdmanagement.blogspot.com/2010/07/how-to-keep-your-team-loose.html">flexible</a> by example. It builds and environment of trust, partnership and teamwork.
<br />
<blockquote>
Listening for comprehension helps you get that information, of course, but it’s more than that: it’s also the greatest sign of respect you can give someone. So I shifted, by necessity, to try to become more relaxed in what I was doing and just to be more patient and open to new ideas. And as I started focusing on comprehension, I found that my bandwidth for listening increased in a very meaningful way.</blockquote>
Listening can help leaders <a href="http://rdmanagement.blogspot.com/2011/04/sparking-creativity-in-teams.html">immerse themselves</a> in the organization and gather the right information, generate new connections and spark creativity / innovation. Leaders need to <a href="http://rdmanagement.blogspot.com/2012/01/innovators-dna-some-are-born-others-can.html">talk with different people</a>&nbsp;- not just their direct reports because useful pieces of information reside in different places.
<br />
<blockquote>
My method of gathering the tiles involves regularly visiting with, and listening to, people in the company who don’t necessarily report to me. I also read as much as I possibly can: surveys, operating data, analyst reports, regulatory reports, outside analyses, and so on. I meet with our top ten investors twice a year to listen, and at shareholder conferences I consider the Q&amp;As very important. The key is making yourself open to the possibility that information can and will come from almost anywhere.</blockquote>
Listening can help us become more engaged and <a href="http://rdmanagement.blogspot.com/2010/07/how-to-be-innovative-leader.html">innovative</a> leaders. Listening can also help us <a href="http://rdmanagement.blogspot.com/2010/06/three-big-assumptions-leaders-should.html">question assumptions</a> and get our teams to <a href="http://rdmanagement.blogspot.com/2010/05/why-dont-businesses-experiment-more.html">experiment more</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-31453613531461667322012-04-29T08:06:00.001-07:002012-04-29T08:16:17.370-07:00Steve Jobs: Innovation is the only way to succeedINSEAD Knowledge has published an interview with&nbsp;<a href="http://knowledge.insead.edu/INSEAD-knowledge-steve-jobs-120424.cfm?utm_source=INSEAD+List&amp;utm_campaign=eb2c75ae53-Knowledge+April+2012+Newsletter&amp;utm_medium=email">Steve Jobs</a>&nbsp;from 1996 which has a few very important points for R&amp;D managers: &nbsp;Innovation is the only way to succeed - you can not cut costs to get out of problems.<br />
<blockquote class="tr_bq">
"All I can say is I think it was true back when we built Apple and I think it is just as true today which is innovation is the only way to succeed in these businesses. You can’t stand still.<br />
You can’t cut expenses and get out of your problems. You can’t cut expenses and get out of your problems. You’ve got to innovate your way out of your problems.</blockquote>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://gallery.mailchimp.com/996d3c0b33bb141e0cf56a1a0/images/cover_03.7.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://gallery.mailchimp.com/996d3c0b33bb141e0cf56a1a0/images/cover_03.7.jpg" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">image from Insead Knowledge</td></tr>
</tbody></table>
So, lets dig in...<br />
<a name='more'></a>We have discussed <a href="http://rdmanagement.blogspot.com/2011/05/steve-jobs-methodology-for-apple-r.html">many of these points in the past</a>, but this interview provides a few more details. &nbsp;First is the recurring theme of <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-user.html">user-centric design</a> - products should not require customers to learn underlying technology:<br />
<blockquote>
Well, one of the reasons I’m so interested in graphics is that it makes things accessible to people without them having to know how it works. So as an example, the Macintosh was really that – we used graphics to make it easy to use; it was the computer for the rest of us. And you didn’t really have to know all this computerese to use it because of the great graphics and user interface.</blockquote>
Even more interesting is the fact that Jobs took the same approach with Pixar: Movie goers should be able to enjoy the experience without worrying about 10 years of R&amp;D that went into creating the movie. We have discussed this in detail in the post about <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology_31.html">focus on your niche</a>.<br />
<blockquote>
And it’s the same way with Toy Story at a much higher level. An audience between 80 and 100 million people will hopefully see Toy Story by the time it rolls out throughout the world, and yet none of them had to read a manual before they saw the movie to appreciate it. None of them had to understand the technology and the ten years of R&amp;D and investment that went in to be able to create that movie to enjoy it, and that’s what’s so wonderful. </blockquote>
Another foundation of successful R&amp;D management is <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-long.html">a long-term vision</a>. Steve Jobs again demonstrates his ability to think long-term. &nbsp;He was working towards removing keyboard input back in the mid 90s:
<br />
<blockquote>
And I see more and more of that infusing society where you have a tremendous technology but it has a face which is very approachable and you don’t have to understand the technology to interact or use the product....</blockquote>
<blockquote>
You know I think that’s the potential of the Internet. We’re certainly not there today. Typing an H-T-T-P slash slash colon w-w-w, you know, is arcane. I mean, you shouldn’t even need a keyboard to use the Internet but we still do. And I think we’ll get to where it really is very simple, but we have a few years to go.</blockquote>
The next lesson for us R&amp;D managers is that of hands-on involvement. &nbsp;<a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology.html">An engaged leader</a> is critical to motivating teams and delivering innovation (by overcoming problems such as <a href="http://rdmanagement.blogspot.com/2010/08/valley-of-death-in-product-innovation.html">valley of death</a>). &nbsp;Jobs was not had the vision of where products need to go, he was involved in detailed technology development and the business models that need to be developed to support the new technology. &nbsp;In this case, he was developing a vision about iTunes in mid-90s...<br />
<blockquote class="tr_bq">
We look at the internet and it looks very exciting to us, but we don’t see how to make any money from it. We haven’t seen any business models emerge where we can put content on the Internet and end up being rewarded for that. And since our talented people always have opportunities to work on things where we do get financially rewarded, we’re not about to take them off that and put them on the Internet until we see a business model that makes sense. And I think we will, you know, in the next one to two years.</blockquote>
&nbsp;We have a lot of interesting posts about <a href="http://rdmanagement.blogspot.com/search/label/Innovation%20Management">innovation management</a>...Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-45180291752976025322012-04-28T08:53:00.001-07:002012-04-28T08:53:22.745-07:00Unilever's Kees Kruythoff: Enthusiastic Employees Key to SuccessA quick post about a lecture by Unilever's Kees Kruythoff in Knowledge@Wharton (<a href="http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&amp;articleid=2579&amp;languageid=1">Global Leadership Lessons from Unilever's Kees Kruythoff </a>). &nbsp;Kruythoff mentions that a sense of enthusiasm and excitement is key to a company's success and makes progress possible. &nbsp;He sees that sense of enthusiasm has been a key to his own success:<br />
<blockquote class="tr_bq">
"Kruythoff said that his enthusiasm for his job has always been what has propelled him. There is really no substitute for that, he noted, and, in reality, enthusiasm should be the primary reason anyone should work for an organization. "When you join a business, the most important part is to ask yourself how you can improve the values of the company," Kruythoff stated. "&nbsp;</blockquote>
One way to get an enthusiastic workforce is to hire employees that clearly demonstrate the sense of excitement:<br />
<a name='more'></a><br />
<blockquote class="tr_bq">
A new employee should have a sense of excitement, he added, and make sure that he or she is a good fit with the company. "Wherever you go, if it feels like the place where you want to be, then in all likelihood it is."&nbsp;&nbsp;</blockquote>
However, &nbsp;the leaders still need to maintain and fuel that excitement. &nbsp;A sense of excitement will help overcome any hurdles in the organizations path and build a positive environment.<br />
<blockquote class="tr_bq">
Enthusiasm makes progress possible, Kruythoff said, and leaders must build that excitement and fire among their employees. Not every decision is a winner, but when employees are optimistic about the future of the firm, that atmosphere will help move the company in the right overall direction.</blockquote>
The article does not quite talk about how to build and maintain this sense of excitement. &nbsp;Here is what we have learned in this blog:<br />
<br />
<ul>
<li>One way to do this would be to create and <a href="http://rdmanagement.blogspot.com/2012/01/creating-leaders.html">communicate a vision for the organization</a>. Steve Jobs <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-long.html">did this very effectively</a>&nbsp;- so much so that the employees were willing to put up with extreme work hours and his tantrums.&nbsp;</li>
<li>Once an organization is enthusiastic, it may be necessary to <a href="http://rdmanagement.blogspot.com/search?q=necessity+is+the">provide challenges</a> to <a href="http://rdmanagement.blogspot.com/2011/04/sparking-creativity-in-teams.html">spark the creativity (and hence enthusiasm) in the organization</a>.&nbsp;</li>
<li>Another key to building enthusiasm is to be thoroughly engaged in the company's business. &nbsp;Teams get really excited when they find that their work is important to the leadership. &nbsp;It may be important to roll up your sleeves and participate in some detailed work from time to time. &nbsp;Again, Steve Jobs <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology.html">provides a good example</a>.</li>
<li>Finally, forming teams and providing them a clear challenge, charter and resources may be another way to build enthusiasm. &nbsp;This is hard to is <a href="http://rdmanagement.blogspot.com/2010/07/analysis-of-predictors-of-team.html">multi-location virtual teams</a>, but still very important to <a href="http://rdmanagement.blogspot.com/2012/01/large-vs-small-team-performance.html">overall performance</a>.</li>
</ul>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-58257188333731637392012-04-24T10:04:00.002-07:002012-04-24T10:04:45.552-07:00Why Open Innovation is Hard to Implement (Netflix Example)We have discussed the <a href="http://rdmanagement.blogspot.com/2012/02/why-open-innovation-is-hard-to.html">difficulties in implementing open innovation</a>. &nbsp;Netflix did an amazing job of leveraging open innovation with <a href="http://en.wikipedia.org/wiki/Netflix_Prize">Netflix Prize</a>. For a while they were receiving amazing results from the exercise. That is why, I was surprise when I read the article&nbsp;<a href="http://arstechnica.com/gadgets/news/2012/04/netflix-never-used-its-1-million-algorithm-due-to-engineering-costs.ars">Netflix never used its $1 million algorithm due to engineering costs</a>:<br />
<blockquote class="tr_bq">
"Netflix awarded a $1 million prize to a developer team in 2009 for an algorithm that increased the accuracy of the company's recommendation engine by 10 percent. But today it doesn't use the million-dollar code, and has no plans to implement it in the future,"</blockquote>
Let us dig in to see what we can learn...<br />
<a name='more'></a>First of kudos to Netflix for <a href="http://www.netflixprize.com/">engaging a very wide community</a> in the innovation. &nbsp;But more importantly, Netflix was great at&nbsp;<a href="http://www.netflixprize.com/leaderboard">setting up tools to keep the community engaged</a>. The second point is overlooked by many organizations engaging in open innovation portals. &nbsp;Let us go through each of the <a href="http://rdmanagement.blogspot.com/2012/02/why-open-innovation-is-hard-to.html">four challenges</a>&nbsp;we identified about Open Innovation and see how Netflix was able to address them:<br />
<ol>
<li><b>Valley of Death </b>is when organizations are unable to incorporate outside innovation into delivered products even <a href="http://rdmanagement.blogspot.com/2010/08/valley-of-death-in-product-innovation.html">after acquiring it</a>.&nbsp;Netflix focused open innovation around a problem critical to their business - predicting what movies customers will like. &nbsp;If the outside innovators were able to demonstrate those results, it would be hard for internal experts to resist implementation (because of not-invented-here mentality). &nbsp;More importantly, there would be <a href="http://rdmanagement.blogspot.com/2011/04/nurturing-disruptive-innovation.html">management attention</a> on the subject because of its importance to overall business - which would surely help overcome the valley of death.</li>
<li><b>Trade Secret Protection:</b> Netflix was in a unique position because they did not have to disclose their current implementation in anyway. &nbsp;All they had to do was to publish the output of their algorithm. &nbsp;They were able to provide data to the outside innovators to test performance relative to Netflix's performance. &nbsp;In most Open Innovation problems, it will be hard for organizations to set up a problem so that they do not have to disclose any internal know-how. &nbsp;But something everyone should consider...</li>
<li><b>Evaluation / Management Costs:</b>&nbsp;Although Netflix had to set up an extensive infrastructure to administer Open Innovation, the costs were some what mitigated. &nbsp;Netflix was able to device an approach where the community was able to test their algorithms internally before sending it to Netflix. &nbsp;Furthermore, Netflix provided clear guidelines and test data for the outside innovators. &nbsp;This self evaluation by inventors reduced the overhead required to manage/test <a href="http://rdmanagement.blogspot.com/2011/05/should-companies-outsource-innovation.html">innovation ideas submitted for consideration</a>.&nbsp;</li>
<li><b>IP Liability:</b> Netflix bypassed the entire IP problem by only requiring the "implemented" algorithms be provided for evaluation against the test set. &nbsp;The details of the algorithm need only be discolosed if the algorithm actually produced required results. &nbsp;Furthermore, by requiring that the results be published (thereby leveraging advantages <a href="http://rdmanagement.blogspot.com/2012/02/impact-of-open-source-on-open.html">open source provides to open innovation</a>). I am not sure how many companies will be able to the IP liability issues this way...</li>
</ol>
Even so, Netflix was not able to get full benefit from the $1M prize because of <a href="http://techblog.netflix.com/2012/04/netflix-recommendations-beyond-5-stars.html">two factors</a>. First, the cost of implementing the algorithm was so high that they could not close the business case:<br />
<blockquote>
We evaluated some of the new methods offline but the additional accuracy gains that we measured did not seem to justify the engineering effort needed to bring them into a production environment. </blockquote>
Second, the market had changed from DVD rentals at the time of innovation challenge to&nbsp;to on-line streaming so that&nbsp;the benefit of the innovation was minimized:<br />
<blockquote>
Also, our focus on improving Netflix personalization had shifted to the next level by then. </blockquote>
This is an important lesson for all R&amp;D managers: Even if we can overcome most of the challenges in implementing Open Innovation, several other factors may still prevent us from gaining full benefit of the investment. &nbsp;However, all was not lost. Netflix was able to use some of the algorithms developed at early stages of the challenge to gain significant benefits.<br />
<blockquote class="tr_bq">
Netflix notes that it does still use two algorithms from the team that won the first Progress Prize for an 8.43 percent improvement to the recommendation engine's root mean squared error (the full $1 million was awarded for a 10 percent improvement). </blockquote>
That too is an interesting idea: Set up intermediate goals for open innovation and incorporate them into the overall <a href="http://rdmanagement.blogspot.com/2012/03/example-of-good-r-plan.html">R&amp;D planning process</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-41455396548471874052012-04-18T13:38:00.000-07:002012-04-18T13:38:36.067-07:00What You Wear Can Influence How You PerformAn interesting article in the Sloan Management Review discusses a paper that shows&nbsp;<a href="http://sloanreview.mit.edu/improvisations/2012/04/05/what-you-wear-can-influence-how-you-perform/?utm_source=WhatCounts+Publicaster+Edition&amp;utm_medium=email&amp;utm_campaign=Enews+4+17+2012+first&amp;utm_content=What+you+wear+can+influence+how+you+perform#.T42hHKuLsqg">what you wear can influence how you perform</a>.<br />
<blockquote class="tr_bq">
New research suggests that clothing can have an effect on our behavior if that clothing has a symbolic meaning and if we have the physical experience of wearing the clothes.&nbsp;</blockquote>
Three experiments showed that knowing that you are wearing a doctor's coat actually improved performance:<br />
<blockquote class="tr_bq">
&nbsp;In the first experiment, the researchers found that wearing a lab coat identified as a doctor’s coat did, in fact, increase subjects’ selective attention. In the second experiment, they found that people who wore the same coat but were told it was a painter’s coat did not have increased attention. And in the third experiment, they found that just looking at a doctor’s coat did not increase attention.</blockquote>
Here is the link to the research&nbsp;<a href="http://www.sciencedirect.com/science/article/pii/S0022103112000200">paper</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com1tag:blogger.com,1999:blog-6194977843764799641.post-70369520021872191472012-04-17T00:41:00.000-07:002012-04-17T00:41:00.536-07:00Update on Sony's Future PlansTwo months ago, Sony's president to-be had <a href="http://rdmanagement.blogspot.com/2012/02/sonys-next-president-announces-future.html">announced his plan</a> to turn Sony around. Now, the new President has actually reconfirmed his plans and provided a few more details (<a href="http://www.reuters.com/article/2012/04/12/us-sony-plan-idUSBRE83B09J20120412">Sony CEO wields ax, sets turnaround targets</a>):<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-Jq99hs1rF-I/T4kqD8JxBvI/AAAAAAAAAxY/N1BiL5-Td40/s1600/amazon-liveblog0547.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="212" src="http://1.bp.blogspot.com/-Jq99hs1rF-I/T4kqD8JxBvI/AAAAAAAAAxY/N1BiL5-Td40/s320/amazon-liveblog0547.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span style="font-size: small; text-align: -webkit-auto;">via</span><span style="font-size: small; text-align: -webkit-auto;">&nbsp;</span><a href="http://www.engadget.com/2012/04/12/kaz-hirai-reveals-one-sony-turnaround-strategy-will-cut-10-00/" style="font-size: medium; text-align: -webkit-auto;">engadget</a></td></tr>
</tbody></table>
<a name='more'></a>The plans seem to not have changed much:<br />
<blockquote>
Key initiatives to transform the electronics business are:<br />
1. Strengthening core businesses (Digital Imaging, Game, Mobile)<br />
2. Turning around the television business<br />
3. Expanding business in emerging markets<br />
4. Creating new businesses and accelerating innovation<br />
5. Realigning the business portfolio and optimizing resources</blockquote>
The main addition to the strategic plan announced earlier is numerical goals. &nbsp;However,&nbsp;there is not much more detail compared to what we had discussed earlier (except the loss of 10,000 jobs). &nbsp;There is no discussion about how the TV business can be turned around or how Sony plans to reenter OLED TV market after exiting it just a couple of months ago. &nbsp;Nor is there any explanation of why innovation equates to medical devices...&nbsp;No wonder the financial community is underwhelmed:<br />
<blockquote class="tr_bq">
"I can't make out a growth story here. <b>It's good they've announced numerical targets, but you can't tell how they're going to achieve them</b>," said Kikuchi Makoto, CEO of Myojo Asset Management.</blockquote>
There is also no clear <a href="http://rdmanagement.blogspot.com/2012/03/roadmaps-as-foundation-for-effective-r.html">roadmap</a> here that can drive <a href="http://rdmanagement.blogspot.com/2012/03/example-of-good-r-plan.html">R&amp;D planning</a> or help achieve these goals.<br />
<blockquote class="tr_bq">
<br />
"It doesn't feel like an aggressive makeover," said Tetsuro Ii, president of Commons Asset Management, who oversees $33 million of assets and doesn't hold Sony stock. "<b>You can't really see the roadmap for how they're going to revive the electronics business, nor how they're going to create new value.</b>"&nbsp;</blockquote>
&nbsp;The full strategy presentation can be found <a href="http://www.sony.net/SonyInfo/IR/financial/fr/viewer/strategy/2012/">here</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com1tag:blogger.com,1999:blog-6194977843764799641.post-53041436162046507692012-04-13T23:54:00.000-07:002012-04-13T23:54:40.286-07:00Toyota aims to spice up cars with new development methodsWe have discussed Toyota's R&amp;D management processes extensively (<a href="http://rdmanagement.blogspot.com/2010/07/behind-scenes-at-toyotas-r-center-part.html">here</a> and <a href="http://rdmanagement.blogspot.com/2010/07/behind-scenes-at-toyotas-r-center-part_25.html">here</a>). You might also remember Toyota's <a href="http://rdmanagement.blogspot.com/2010/06/akio-toyoda-toyotas-plan-to-repair-its.html">recalls and problems</a> a couple of years ago. &nbsp;Toyota's president (Mr. Toyoda) had announced that he would beef up the quality control processes to address these problems. &nbsp;In fact, Toyota did announce&nbsp;an increased cycle of quality control (see <a href="http://rdmanagement.blogspot.com/2011/02/toyotas-devils-advocate-policy-looks-to.html">Devil's Advocate Policy</a>). &nbsp;We had discussed that the root cause of Toyota's problems was increased system&nbsp;<a href="http://rdmanagement.blogspot.com/2010/06/key-challege-for-r-manages-manage.html">complexity</a>, and that increased quality control <a href="http://rdmanagement.blogspot.com/2011/06/what-really-happened-to-toyota.html">would not be able to address underlying problems</a>. This analysis was later validated by <a href="http://rdmanagement.blogspot.com/2011/06/toyotas-quality-improvement-changes.html">others</a>. Now Toyota is talking about changing their R&amp;D processes (See&nbsp;<a href="http://www.autonews.com/apps/pbcs.dll/article?AID=/20120409/OEM03/120409856/1115/toyota-aims-to-spice-up-cars-with-new-development-methods">Toyota aims to spice up cars with new development methods</a>)<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-8TjhHDnAU24/T4kEJ6oJJnI/AAAAAAAAAxQ/M8wckW-7qSU/s1600/toyota-ns4-concept-15.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="213" src="http://2.bp.blogspot.com/-8TjhHDnAU24/T4kEJ6oJJnI/AAAAAAAAAxQ/M8wckW-7qSU/s320/toyota-ns4-concept-15.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">image from <a href="http://www.autoblog.com/2012/04/10/toyota-retools-development-process-with-goal-of-creating-more-ex/">engadget</a></td></tr>
</tbody></table>
<a name='more'></a>Details are scarce, but the three key points made in the article, if implemented correctly, will definitely benefit Toyota. &nbsp;The first is to reduce the bureaucratic overhead on the development process. &nbsp;It is amazing to know that 80 to 100 executives were previously included in the approval loop. &nbsp;It appears that Toyota will eliminate some of the reviews:<br />
<blockquote class="tr_bq">
"The company will also give greater authority to chief engineers and slash the number of executives involved in the design review process -- about 80 to 100 previously -- to eliminate layers of decision-making."</blockquote>
This can be a step in the right direction. As we had discussed <a href="http://rdmanagement.blogspot.com/2011/02/toyotas-devils-advocate-policy-looks-to.html">earlier</a>, reviews and post design quality control&nbsp;are rarely effective because&nbsp;most design decisions have already been made by then. &nbsp;The additional effort needs to be to drive risk management decisions into <a href="http://rdmanagement.blogspot.com/2010/11/enhanced-r-risk-management.html">upfront planning</a>. Toyota seems to be addressing that concern as well:
<br />
<blockquote>
Greater cooperation between the planning and design divisions will allow more design freedom...</blockquote>
Finally, the company is going to move focus away from near-term sales volume and growth to longer-term customer/product focus. &nbsp;We had also pointed out this to <a href="http://rdmanagement.blogspot.com/2010/07/epidemic-of-failing-to-manage-growth.html">be a key problem</a>.
<br />
<blockquote>
"The feeling at the time was, 'If we build it, they will come,'" Toyoda told reporters at the automaker's headquarters in central Japan today. <b>"Instead of developing what customers would want next, we were making cars that would rake in sales."</b></blockquote>
I love Toyota products and wish them luck.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com1tag:blogger.com,1999:blog-6194977843764799641.post-31456735544501586772012-04-10T23:37:00.002-07:002012-04-10T23:37:41.651-07:00Vertical Integration Works for Apple -- But It Won’t for EveryoneAn interesting article from Knowledge@Wharton has good info for R&amp;D managers <a href="http://knowledge.wharton.upenn.edu/article.cfm?articleid=2959">Vertical Integration Works for Apple -- But It Won’t for Everyone</a>. Apple's success with iPhone has increased the emphasis on vertical integration - controlling most parts of the value chain to the consumer:
<br />
<blockquote>
"Vertical integration dictates that one company controls the end product as well as its component parts. In technology, Apple for 35 years has championed a vertical model, which features an integrated hardware and software approach. For instance, the iPhone and iPad have hardware and software designed by Apple, which also designed its own processors for the devices. This integration has allowed Apple to set the pace for mobile computing. "Despite the benefits of specialization, it can make sense to have everything under one roof," says Wharton management professor David Hsu."</blockquote>
<br />
<a name='more'></a>As the article points out, Google's purchase of Motorola, Oracle's acquisition of Sun etc all point towards more vertical integration. Clearly, more pieces of the value chain a company controls, the better it will be at differentiating itself from competitors. Vertical integration will allow organizations to develop better products faster because of fewer IP constraints and better collaboration.<br />
<blockquote class="tr_bq">
what Apple's competitors really envy is the company's control of its ecosystem.&nbsp;</blockquote>
However, control of the ecosystem requires more than controlling the product. &nbsp;Google and Oracle are attempting to control hardware and software aspects of their products. &nbsp;
It is not easy to align hardware and software development paths. &nbsp;As we have seen in the past, Steve Jobs&nbsp;<a href="http://rdmanagement.blogspot.com/2011/05/steve-jobs-methodology-for-apple-r.html">actually disconnected the two</a>&nbsp;during &nbsp;iPhone development.&nbsp;<br />
<blockquote class="tr_bq">
Hrebiniak notes that hardware and software require different competencies and skill-sets in areas such as manufacturing, procurement and supply chains. In that respect, the challenges these firms face will be similar to what many diversified multinationals deal with when managing disparate business units.</blockquote>
However, to achieve Apple like results, they will need to <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology_31.html">control many other parts of the value chain as well</a>.<br />
<blockquote class="tr_bq">
"It is important to distinguish between a motivation to manage the interface between hardware and software and a desire to manage one’s ecosystem.</blockquote>
One key point that people forget is that Apple has had a 30 year history of vertical integration. Their corporate culture is built around that concept. <br />
<blockquote class="tr_bq">
."Apple does well, but has had top-down integration of hardware and software for more than 30 years," Hrebiniak states. That integration, which requires centralization foreign to Google and many other companies, is hard to deliver.</blockquote>
There are many &nbsp;negatives to vertical integration. &nbsp;Larger R&amp;D organizations become&nbsp;<a href="http://rdmanagement.blogspot.com/2010/06/how-to-manage-virtual-teams-magazine.html">virtually connected</a>&nbsp;regardless of the physical location and suffer the same disadvantages of a multi-organization team. Add to it the fact that large teams pay a&nbsp;<a href="http://rdmanagement.blogspot.com/2012/01/large-vs-small-team-performance.html">performance penalty</a>. &nbsp;Vertical integration will also expose companies to significant other risks ranging from culture clash to development efficiency: <br />
<blockquote class="tr_bq">
For instance, Hsu suggests that the advancement and growth of Google’s Android technology may slow if the company is juggling hardware and software efforts. Even though Android is technically open source, Google drives development. "Google integration with Motorola Mobility could make products better, but the risk is that Android may not evolve at the same pace it would under a specialization model."</blockquote>
Companies planning vertical integration should consider approaches to build <a href="http://rdmanagement.blogspot.com/2010/06/building-focused-r-commuities.html">focused R&amp;D communities</a>. Companies will also need to enhance their management processes for <a href="http://rdmanagement.blogspot.com/search?q=virtual+team">virtual teams</a>. They will also need to master <a href="http://rdmanagement.blogspot.com/2011/03/how-to-succeed-in-distributed-product.html">distributed product development</a>. &nbsp;Finally, they will need to <a href="http://rdmanagement.blogspot.com/2012/03/apples-r-portfolio-strategy-get-rid-of.html">learn from Apple</a> and improve their <a href="http://rdmanagement.blogspot.com/search/label/Portfolio%20Management">R&amp;D project portfolio management</a>. &nbsp;Alternatively, companies can use&nbsp;<a href="http://rdmanagement.blogspot.com/2010/06/codesign-another-increase-in-r.html">Codesign</a>&nbsp;&nbsp;to work around vertical integration. More importantly, it is essential to remember that all business models can lead to success and that different business models lead to a more vibrant and vital competitive landscape. <br />
<br />
<blockquote>
but you need multiple models in the technology industry," she says. "If every tech company followed Apple, there would be a degree of novelty and innovation lost." </blockquote>
More importantly, no one knows how much of Apple's success was tied to&nbsp;<a href="http://rdmanagement.blogspot.com/2012/01/apple-without-steve-jobs.html">Steve Jobs</a>:<br />
<blockquote>
After all, Apple's success may be largely a function of a command and control structure instituted under former CEO Steve Jobs.</blockquote>
learly, there is an increasing trend towards vertical integration in the technology industry. &nbsp;However, this is not a new phenomenon. &nbsp;Companies such as GE have ventured down the path many decades ago and are now actually scaling back to achieve focus.<br />
<blockquote>
"Haven't we seen this movie before?" asks Whitehouse, pointing to the rise of multinational conglomerates in the mid-20th century. For example, Vivendi transformed itself from a water company to one focused on media, while GE started as an electric company but later expanded into such disparate businesses as microwave ovens and the NBC television network (which it recently sold to Comcast.) "Conglomerates are now refocusing after spreading themselves too thin," says Whitehouse. “Can expanding tech companies learn the lessons of an earlier wave of conglomerates?"</blockquote>
Companies move away from vertical integration when their market becomes commoditized. &nbsp;In commodity markets, it is important to focus on efficiency which can only be achieved through focus. &nbsp;When that will happen in the tech industry in unknown.<br />
<blockquote class="tr_bq">
&nbsp;Typically, companies back away from vertical integration as products become more commoditized. It is unclear when that will happen in the smartphone or tablet markets, but the advent of that period would likely mean trouble for vertically integrated firms. </blockquote>
Apple has been able to successfully avoid &nbsp;commoditizing by moving into new market segments. &nbsp;Any company considering vertical integration should also keep that in mind. &nbsp;When Apple tried to compete in the commodity market with vertical integration, it failed!<br />
<blockquote class="tr_bq">
"What Apple has done well is stay ahead of commoditization," Hsu notes. "Apple is more of a trailblazer and that opens up possibilities." The catch is that a vertical approach does not provide a significant advantage if a firm is unable to stay ahead of the competition. Indeed, Apple's integrated approach in the PC market did not work to the firm's benefit when it was battling Microsoft in the 1980s and 1990s.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com1tag:blogger.com,1999:blog-6194977843764799641.post-15109403993972791922012-04-08T12:52:00.001-07:002012-04-08T12:52:19.488-07:00Does the compensation plan provide the right incentives?Incentives are key to driving R&amp;D manager behavior. &nbsp;We have often discussed different approaches to <a href="http://rdmanagement.blogspot.com/2012/01/more-effective-financial-incentives.html">improve financial incentives</a>. A new article from McKinsey Quarterly has a unique take on how to evaluate compensations plans (<a href="https://www.mckinseyquarterly.com/Governance/Compensation/Does_your_CEO_compensation_plan_provide_the_right_incentives_2952">Does the CEO compensation plan provide the right incentives?)</a>. &nbsp;The premise is that in addition to the remuneration for the current year, the accumulated wealth from the entire tenure drives executive behavior. <br />
<blockquote>
Boards, shareholders, and journalists often look at a chief executive’s annual compensation plan to determine whether the company is offering the right incentives to increase shareholder value. But few consider another key question:<b> how does the compensation that the CEO has already received over the years in the form of stock and stock options influence managerial decision making?</b></blockquote>
<br />
<a name='more'></a>The authors compared the median total annual compensation of chief executives and comparing it with their median total accumulated wealth.&nbsp;Their analysis shows that&nbsp;median&nbsp;accumulated wealth is nine times the year-to-year compensation for a CEO of a large company.<br />
<blockquote>
Our research shows that for most CEOs in the United States, accumulated wealth effects are likely to swamp those of year-to-year compensation—meriting serious attention when boards evaluate how risk structures and incentives of executive pay packages align with the company’s strategy.</blockquote>
We have discussed the inability to tie pay to executive performance (See <a href="http://rdmanagement.blogspot.com/2011/04/problem-with-financial-incentives.html">Problem with Financial Incentives</a>). We have also talked about <a href="http://rdmanagement.blogspot.com/2012/01/considerations-for-determining.html">longer vesting periods</a> to better align performance with pay. &nbsp;This article gives a somewhat new perspective that longer vesting periods might actually have a negative impact because the accumulated wealth might start outweighing new compensation.<br />
<br />
Another unique perspective in the article is the convexity of the compensation package. If the compensation package is shares, the wealth change is linear with the stock price. &nbsp;Stock options on the other hand increase in value much more rapidly.<br />
<blockquote>
If the CEO’s portfolio contains only shares, it will tend to rise and fall one-for-one with a change in stock price. We refer to this as “low convexity.” If, however, the CEO’s portfolio contains a large number of stock options, and especially multiple tranches of out-of-the-money stock options, the payoff curve can become quite steep (high convexity). Convex payoff structures such as these provide more financial incentives for CEOs to take on promising—albeit risky—investments because the CEO stands to earn very large rewards if successful. </blockquote>
Hence, as we have <a href="http://rdmanagement.blogspot.com/2011/07/why-stock-options-lead-to-more-risk.html">discussed before</a>, stock options encourage risk taking to get to the higher payoff. &nbsp;More risk taking may or may not be advantageous for the company and the board needs to be cognizant of its implications. &nbsp;The article does not address it, but we have discussed the inability of stock options to <a href="http://rdmanagement.blogspot.com/2011/04/impact-of-employee-stock-options-on.html">actually drive good behavior</a>.<br />
<br />
So what is the overall recommendation? Understand the accumulated wealth effect before deciding on a compensation plan. &nbsp;This is especially pertinent for a longer term manager who is likely to have accumulated a large wealth. &nbsp;Decide whether you want more risk taking before granting stock options. &nbsp;Finally, benchmark with other companies and industries to decide the appropriate balance.<br />
<blockquote class="tr_bq">
"Since this analysis is relatively new, and wealth effects aren’t routinely calculated and reported, we suggest boards do some benchmarking against peers to see if it raises questions about the financial incentives they have created for their CEO. Is risk in line with industry peers, and, more importantly, is it in line with the company’s strategic objectives? Have changes in the stock market changed the convexity of the CEO’s reward curve in a way that encourages excessive risk? If so, should the board change the mix of future annual pay grants to get the curve back in line with objectives? Should it reprice existing options to reduce convexity? If the CEO wants to sell or hedge some of his or her personal portfolio in order to reduce personal-investment risk, how will this change the incentives to perform?"</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-11453677877529900222012-03-29T19:29:00.002-07:002012-12-03T00:13:02.239-08:00R&D Management Best PracticesThe article&nbsp;<a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1540-5885.2011.00888.x/full#jpim888-note-0007">An Examination of New Product Development Best Practice</a>&nbsp;from Journal of Product Innovation Management has great best practice AND benchmarking information for all R&amp;D organizations. &nbsp;The authors of the article conducted a survey of 286 companies across USA and Europe. &nbsp;The objective was to understand what best practices are implemented, what best practices are not implemented and what practices are understood to be poor (Please note, the article uses NPD for New Product Development):<br />
<blockquote class="tr_bq">
..it is unclear whether NPD practitioners as a group (not just researchers) are knowledgeable about what represents a NPD best practice. The importance of this is that it offers insight into how NPD practitioners are translating potential NPD knowledge into actual NPD practice. In other words, are practitioners aware of and able to implement NPD best practices designated by noteworthy studies? The answer to this question ascertains a current state of the field toward understanding NPD best practice and the maturity level of various practices. Answering this question further contributes to our understanding of the diffusion of NPD best practices knowledge by NPD professionals, possibly identifying gaps between prescribed and actual practice.</blockquote>
The article divides R&amp;D into seven dimensions and looks into best practices for each. &nbsp;Let us dig in:<br />
<a name='more'></a><b>1. Strategy:</b> Strategic alignment for R&amp;D was considered the most important dimension of the seven considered. The article defines strategy as everything from vision definition to prioritization of projects for resource allocation.<br />
<blockquote>
strategy involves the defining and planning of a vision and focus for research and development (R&amp;D), technology management, and product development efforts at the SBU, division, product line, and/or individual project levels, including the identification, prioritization, selection, and resource support of preferred projects.</blockquote>
Within Strategy, most organizations aligned R&amp;D to long-term company strategy and project goals seemed to be aligned well with the organization / mission. &nbsp;Also, organizations were able to redirect projects as markets changed. &nbsp;Here is the list of implemented&nbsp;best practices (again NPD=R&amp;D):<br />
<blockquote>
<ul>
<li>Clearly defined and organizationally visible NPD goals&nbsp;</li>
<li>The organization views NPD as a long-term strategy&nbsp;</li>
<li>NPD goals are clearly aligned with organization mission and strategic plan&nbsp;</li>
<li>NPD projects and programs are reviewed on a regular basis&nbsp;</li>
<li>Opportunity identification is ongoing and can redirect the strategic plan real time to respond to market forces and new technologies
R&amp;D&nbsp;</li>
</ul>
</blockquote>
Some of the best practices that clearly did not get implemented deal with pet projects and managing R&amp;D projects as portfolio. &nbsp;Organizations did not have portfolio management processes implemented or they did not treat R&amp;D projects as a portfolio (each was unique and not measured with respect to others. &nbsp;We have quite a bit of information about R&amp;D portfolio management <a href="http://rdmanagement.blogspot.com/search/label/Portfolio%20Management">here</a>.<br />
<br />
<b>2. Market Research: </b>Understanding of customer/market needs and having them drive the R&amp;D process was the second most dimension of R&amp;D management.<br />
<blockquote>
describes the application of methodologies and techniques to sense, learn about, and understand customers, competitors, and macro-environmental forces in the marketplace (e.g., focus groups, mail surveys, electronic surveys, and ethnographic study).</blockquote>
Within market research, the best practices were pretty straight forward: Use customer research to drive product development. &nbsp;Also involve customer in testing the products at multiple stages of product development.<br />
<blockquote>
<ul>
<li>Ongoing market research is used to anticipate/identify future customer needs and problems&nbsp;</li>
<li>Concept, product, and market testing is consistently undertaken and expected with all NPD projects&nbsp;</li>
<li>Customer/user is an integral part of the NPD process
Results of testing (concept, product, and market) are formally evaluated</li>
</ul>
</blockquote>
We have discussed <a href="http://rdmanagement.blogspot.com/2010/07/customer-driven-r.html">customer driven R&amp;D</a> in the past. We have also discussed that <a href="http://rdmanagement.blogspot.com/2010/07/effects-of-supplier-and-customer.html">over dependence on customer</a> can actually be harmful to R&amp;D. &nbsp;We have also seen Steve Jobs talk about <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-user.html">user centric</a>&nbsp;design, he did not directly involve customers in many stages of R&amp;D. &nbsp;For revolutionary products, customers are unlikely to be a good driver for R&amp;D.<br />
<br />
<b>3. Product Launch: </b>Processes associated with product commercialization / launch were rated the third most important area for best practices.<br />
<blockquote>
Commercialization describes activities related to the marketing, launch, and postlaunch management of new products that stimulate customer adoption and market diffusion.</blockquote>
Bar was not very high relative to launch related processes. &nbsp;Most involved having a process, following it and tracking / learning from results.<br />
<blockquote>
<ul>
<li>A launch process exists&nbsp;</li>
<li>The launch team is cross-functional in nature&nbsp;</li>
<li>A project postmortem meeting is held after the new product is launched&nbsp;</li>
<li>Logistics and marketing work closely together on new product launch&nbsp;</li>
<li>Customer service and support are part of the launch team&nbsp;</li>
</ul>
</blockquote>
<div>
Product launch processes are quite important and we have discussed the impact of corporate cultures on <a href="http://rdmanagement.blogspot.com/2010/10/impact-of-corporate-mind-set-on-new.html">new product launches</a>. The key poor practice identified was keeping product launches secret to prevent unauthorized public announcement. &nbsp;Not sure if that can be helped.</div>
<div>
<br /></div>
<b>4. Processes:</b>&nbsp;The article refers to stage gate reviews and knowledge management as key processes for R&amp;D:<br />
<blockquote>
Within this framework, NPD process is defined as the implementation of product development stages and gates for moving products from concept to launch, coupled with those activities and systems that facilitate knowledge management for product development projects and the product development process.</blockquote>
It appears that most organizations recognized the need to have common processes for R&amp;D: Stage gates, clear go/no-go criteria and well documented processes existed.<br />
<blockquote>
<ul>
<li>A common NPD process cuts across organizational groups&nbsp;</li>
<li>Go/no-go criteria are clear and predefined for each review gate&nbsp;</li>
<li>The NPD process is flexible and adaptable to meet the needs, size, and risk of individual projects&nbsp;</li>
<li>The NPD process is visible and well documented
The NPD process can be circumvented without management approval&nbsp;</li>
</ul>
</blockquote>
The key poor practices seem to be about inadequate IT tool support, uneven access to R&amp;D knowledge and poor implementation of project management practices. &nbsp;May we suggest <a href="http://inspird.com/">InspiRD</a>?<br />
<br />
<b>5. Company Culture:</b> The next highly rated dimension of R&amp;D management was company culture, its acceptance of R&amp;D management as an important constituent and ability for R&amp;D teams to collaborate across disciplines and organizations/suppliers:<br />
<blockquote>
company culture is defined as the company management value system driving those means and ways that underlie and establish product development thinking and product development collaboration with external partners, including customers and suppliers. Characteristics of company culture include the level of managerial support for NPD, sources used for NPD ideas, and if creativity is rewarded and encouraged.</blockquote>
The key complaint about company culture was a rejection of external or disruptive ideas. &nbsp;We have discussed <a href="http://rdmanagement.blogspot.com/search?q=not+invented+here">this extensively</a>.<br />
<br />
<b>6. R&amp;D Climate:</b> This dimension relates to R&amp;D project organization (such as cross functional teams) including leadership and HR support.<br />
<blockquote>
Within this framework, project climate is defined as the means and ways that underlie and establish product development intra-company integration at the individual and team levels, including the leading, motivating, managing, and structuring of individual and team human resources.</blockquote>
The best practices are straight forward - cross functional teams and multiple means of inter/intra team communications.<br />
<blockquote>
<ul>
<li>Cross-functional teams underlie the NPD process&nbsp;</li>
<li>NPD activities between functional areas are coordinated through formal and informal communication&nbsp;</li>
</ul>
</blockquote>
We have discussed <a href="http://rdmanagement.blogspot.com/2011/03/why-project-networks-beat-project-teams.html">project networks</a> as a way to supplement cross-functional teams. &nbsp;A key challenge seems to be the inability to gain support for ideas that cross functions. Also, knowledge transfer across disciplines is also a major challenge.<br />
<br />
<b>7. R&amp;D Metrics: </b>Although metrics was rated the least important area for R&amp;D management, the authors rightly point out that it is because very few meaningful R&amp;D-related metrics exist.<br />
<blockquote>
The metrics and performance measurement dimension of the framework includes the measurement, tracking, and reporting of product development project and product development program performance. </blockquote>
In fact, participants could not point out a single best practice for R&amp;D metrics! &nbsp;We have discussed plenty of <a href="http://rdmanagement.blogspot.com/search/label/Metrics">interesting metrics</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com3tag:blogger.com,1999:blog-6194977843764799641.post-55656829328520447892012-03-26T15:51:00.000-07:002012-03-26T15:51:21.172-07:00How to Become a Better LeaderThe McKinsey Quarterly article&nbsp;<a href="https://www.mckinseyquarterly.com/Organization/Talent/How_centered_leaders_achieve_extraordinary_results_2678">How centered leaders achieve extraordinary results</a>&nbsp;has five pointers to become more effective leaders:
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<a name='more'></a><br />
<ol>
<li>Meaning: Find and communicate what the work actually means. &nbsp;When building momentum around long-term R&amp;D strategies, stories on how the product will impact the customer is extremely important. Using effective stories can generate team ownership in the vision (<a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-long.html">Steve Jobs provides a great example of how</a>).
<blockquote>
...leaders often talk about how their purpose appeals to something greater than themselves and the importance of conveying their passion to others. Time and again, we heard that sharing meaning to inspire colleagues requires leaders to become great storytellers, touching hearts as well as minds.</blockquote>
</li>
<li>Connecting: Innovation requires connection between <a href="http://rdmanagement.blogspot.com/2012/02/why-effective-r-management-is.html">multiple technologies</a>. Creativity requires&nbsp;connections between multiple concepts. &nbsp;And delivering innovative products to market requires teams of <a href="http://rdmanagement.blogspot.com/2010/06/building-focused-r-commuities.html">creative people to come together</a>. &nbsp;An innovative leader should build/leverage connections and <a href="http://rdmanagement.blogspot.com/2011/03/why-project-networks-beat-project-teams.html">encourage networks to form</a> within the organization.<blockquote>
CEOs have always needed to select exemplary leadership teams. Increasingly, they must also be adept at building relationships with people scattered across the ecosystem in which they do business and at bringing together the right people to offer meaningful input and support in solving problems.</blockquote>
</li>
<li>Positive Framing: By <a href="http://rdmanagement.blogspot.com/2010/07/how-to-be-innovative-leader.html">reframing problems</a>, leaders can convert fear or stress into opportunity, and engender creativity. &nbsp;Leaders are also are aware of their <a href="http://rdmanagement.blogspot.com/2012/02/how-leaders-kill-meaning-at-work.html">impact on their teams</a>.<blockquote>
Psychologists have shown that some people tend to frame the world optimistically, others pessimistically. Optimists often have an edge: in our survey, three-quarters of the respondents who were particularly good at positive framing thought they had the right skills to lead change, while only 15 percent of those who weren’t thought so.</blockquote>
</li>
<li>Engaging: Leaders <a href="http://rdmanagement.blogspot.com/2012/02/executives-guide-to-better-listening.html">listen</a> and <a href="http://rdmanagement.blogspot.com/2010/07/how-to-be-innovative-leader.html">engage</a> their teams. They <a href="http://rdmanagement.blogspot.com/2010/11/enhanced-r-risk-management.html">encourage balanced risk taking</a>,&nbsp;act <a href="http://rdmanagement.blogspot.com/2010/06/rewarding-failure.html">rationally in the face of risk</a> and encourage <a href="http://rdmanagement.blogspot.com/2010/05/why-dont-businesses-experiment-more.html">experimentation</a>.<blockquote>
But for many leaders, encouraging others to take risks is extremely difficult. The responsibility CEOs feel for the performance of the entire organization can make the very notion of supporting risk taking extremely uncomfortable. What’s more, to acknowledge the existence of risk, CEOs must admit they don’t, in fact, have all the answers—an unusual mind-set for many leaders whose ascent has been built on a virtuous cycle of success and self-confidence.</blockquote>
</li>
<li>Sustaining energy: Changing / improving organizations and culture is hard. &nbsp;Leaders need to be able to create a <a href="http://rdmanagement.blogspot.com/2011/05/sense-of-urgency-critical-to-driving.html">sense of urgency</a> and maintain it for the duration necessary to implement the change.<blockquote>
All too often, though, a change effort starts with a big bang of vision statements and detailed initiatives, only to see energy peter out. The opposite, when work escalates maniacally through a culture of “relentless enthusiasm,” is equally problematic. Either way, leaders will find it hard to sustain energy and commitment within the organization unless they systemically restore their own energy (physical, mental, emotional, and spiritual), as well as create the conditions and serve as role models for others to do the same. Our research suggests sustaining and restoring energy is something leaders often skimp on.</blockquote>
</li>
</ol>
The article has some benchmark data on what could happen if we master these skills:<br />
<blockquote class="tr_bq">
A recent McKinsey global survey of executives shows that leaders who have mastered even one of these skills are twice as likely as those who have mastered none to feel that they can lead through change; masters of all five are more than four times as likely. Strikingly, leaders who have mastered all five capabilities are also more than 20 times as likely to say they are satisfied with their performance as leaders and their lives in general (for more on the research, see “The value of centered leadership: McKinsey Global Survey results”)."</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com2tag:blogger.com,1999:blog-6194977843764799641.post-51568845396225200762012-03-25T14:30:00.000-07:002012-03-26T16:18:34.592-07:00How to Be More CreativeWall Street Journal article&nbsp;<a href="http://online.wsj.com/article/SB10001424052970203370604577265632205015846.html?mod=ITP_review_0">Jonah Lehrer on How to Be Creative</a>&nbsp;has a list of items that can improve creativity (or innovation). &nbsp;&nbsp;:<br />
<ol>
<li>Color Blue: Subjects solved twice as many puzzles when surrounded by blue.</li>
<li>Broaden the scope: Try to find ways to rephrase the problem so the solution space increases. &nbsp;For example, instead of driving, think of the problem space as transportation or movement.</li>
<li>Think like a child: People who imagine themselves as 7-year-olds are significantly better at divergent problem solving.</li>
<li>Laughing: People who are exposed to short comedy video are 20% better at insight puzzles.</li>
<li>Imagine distance from the puzzle: People are better at solving problems that come from far away.</li>
<li>Work at unusual times: People working at their least alert time of the day are more creative.</li>
<li>Relax: Being relaxed and not focusing too much on the problem improves creativity.&nbsp;As Einstein once declared, "Creativity is the residue of time wasted."</li>
<li>Be persistent: Not every problem can be solved immediately. &nbsp;Keeping at it is important."All great artists and thinkers are great workers," Nietzsche wrote.</li>
<li>Measure progress: If you are getting close, work harder. If you have hit a wall, take a break.</li>
<li>Work outside the box: People who had a 5'x5' box next to them did better at creativity problems.</li>
<li>Daydream: People who daydream are better at creativity.&nbsp;&nbsp;</li>
<li>Get diverse experiences: Steve Jobs believed creativity is about making connections. &nbsp;To make diverse connections, one needs to have a broad set of experiences.</li>
<li>Develop a diverse network:&nbsp;Another Steve Jobs approach to obtaining diverse experiences is to talk to a diverse set of people.</li>
<li>See the world: People exposed to different cultures or who have lived abroad are more creative.</li>
<li>Move to a metropolis: &nbsp;Moving to a larger city is shown to increase inventions.&nbsp;</li>
</ol>
<br />
<a name='more'></a><blockquote class="tr_bq">
We have discussed approaches to&nbsp;<a href="http://rdmanagement.blogspot.com/2012/01/innovators-dna-some-are-born-others-can.html">become more innovative</a>,&nbsp;<a href="http://rdmanagement.blogspot.com/2011/04/sparking-creativity-in-teams.html">enhance team creativity</a>,&nbsp;<a href="http://rdmanagement.blogspot.com/2011/04/nurturing-disruptive-innovation.html">nurture disruptive ideas</a>&nbsp;or&nbsp;<a href="http://rdmanagement.blogspot.com/2010/07/how-to-be-innovative-leader.html">engender innovation</a>. &nbsp;We have discussed <a href="http://rdmanagement.blogspot.com/2011/05/steve-jobs-methodology-for-apple-r.html">Steve Jobs methods extensively</a>. &nbsp;Here is an excerpt from the article about Steve Jobs:</blockquote>
<br />
<blockquote class="tr_bq">
&nbsp;Steve Jobs famously declared that "creativity is just connecting things." Although we think of inventors as dreaming up breakthroughs out of thin air, Mr. Jobs was pointing out that even the most far-fetched concepts are usually just new combinations of stuff that already exists. Under Mr. Jobs's leadership, for instance, Apple didn't invent MP3 players or tablet computers—the company just made them better, adding design features that were new to the product category.
He found that those entrepreneurs with the most diverse friendships scored three times higher on a metric of innovation. Instead of getting stuck in the rut of conformity, they were able to translate their expansive social circle into profitable new concepts.</blockquote>
Finally, not included in the article, but another way to improve&nbsp;<a href="http://www.bsa344.com/Mind%20Over%20Mountain.pdf">ability to tackle problems is to consume some glucose</a>.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-19892719403425364682012-03-24T12:35:00.000-07:002012-03-25T00:30:16.714-07:00Beliefs + Experimentation = SuccessAnother interesting article from MIT&nbsp;<a href="http://sloanreview.mit.edu/the-magazine/2012-spring/53311/uncommon-sense-how-to-turn-distinctive-beliefs-into-action/?utm_source=WhatCounts+Publicaster+Edition&amp;utm_medium=email&amp;utm_campaign=Gen+Enews+March+20+2012&amp;utm_content=How+to+turn+distinctive+beliefs+into+action">Sloan Review</a> discusses how to develop unique strategies and plans. &nbsp;The article points out that many organizations follow strategic frameworks taught in business schools to formulate their strategies.<br />
<blockquote>
...many deploy frameworks and models from the strategist’s toolbox — industry analysis, market segmentation, benchmarking and outsourcing. By jumping straight to generic game plans (such as cost leadership, total quality or product innovation), companies short-circuit the real work of strategy and miss out on finding new insights into the preferences or behaviors of current or potential customers.</blockquote>
If all we do is follow a standard process for developing a strategic plan, we would probably not be able to build a distinct, differentiated business:
<br />
<blockquote>
In a world of fierce competition and rapid imitation, companies that dare to be different capture our attention and our admiration. Some are globally recognized, such as Apple, Google, Tata, Virgin and Zara; others are less well known, or are niche or local players.</blockquote>
The article points out that a good strategic plan starts from determining what are the organizations fundamental beliefs (or culture, values, points of view, differentiators, etc) that set it apart:
<br />
<blockquote>
Good strategies start from a distinctive point of view: for example, an insight into evolving customer needs or about how the world is changing.&nbsp;</blockquote>
However, what are our unique beliefs or viewpoints? It is not easy to figure out what are an organizations true cultural traits that lead to success and what are just approaches that we have developed along the way.<br />
<a name='more'></a>The article gives a good example of Ikea trying to figure out the root causes of its success:<br />
<blockquote>
Consider the case of Ikea, the Swedish furniture retailer that continues to be highly distinctive almost five decades after its founding in 1963. Built on Ingvar Kamprad’s belief that he could “create a better everyday life for the many people” by providing affordable, good-quality furniture, the company grew internationally in the late 1960s and early 1970s by replicating what worked in Sweden.7 <b>However, Kamprad and his colleagues didn’t fully understand which parts of their offering people actually cared about: </b>Was it the expansive and customer-friendly showrooms? Was it the low prices and the products requiring relatively easy assembly? Was it the quirky Swedish product names and blue-and-yellow branding? <b>Ikea’s repeated success in new markets it entered made executives wary of changing any part of the original formula.</b> </blockquote>
Differentiators are even harder to figure out in case of R&amp;D. &nbsp;Many organizations make strategic decisions based on <a href="http://rdmanagement.blogspot.com/2011/03/when-to-rely-on-gut-feelings.html">gut feelings</a> without really having an approach to <a href="http://rdmanagement.blogspot.com/2011/08/big-idea-before-you-make-that-big.html">guide decision making</a>.&nbsp;As we have discussed&nbsp;<a href="http://rdmanagement.blogspot.com/2010/05/why-dont-businesses-experiment-more.html">many times</a>,&nbsp;most companies tend to develop product strategies without careful thought or experimentation. <br />
<blockquote class="tr_bq">
However, few companies manage to develop original strategies by formulating hypotheses and then testing them out in a competitive setting.&nbsp;</blockquote>
In case of Ikea, market realities in United States and Japan forced them to understand what are their true core values. &nbsp;:<br />
<blockquote class="tr_bq">
It was only when the company experienced problems in Japan and the United States that executives undertook to sort out the truths and falsehoods and create a more flexible business approach.&nbsp;</blockquote>
The article provides a new approach for discovering an organization's discriminators by focusing on beliefs.
<br />
<blockquote>
Our perspective is built on two core premises: 1) that companies need a unique set of beliefs to stand out from the crowd, and 2) that some beliefs ring truer with customers and employees than others. </blockquote>
As such the article focuses on three types of beliefs: 1) about the market, 2) about the internal culture, and 3) vision of the future:<br />
<blockquote>
Beliefs can take many forms, but the three most important ones are: 1) those that predict how the market will respond to the company’s strategic choices, such as a new technology or service offering; 2) those that predict how employees will respond to organizational and managerial choices, such as a more flexible or empowered working environment; and 3) those that predict how the future will be different, for example in terms of emerging consumer needs, new technological possibilities or shifts in the geopolitical system.</blockquote>
&nbsp;The idea is that companies in any market segment will share some <b>common beliefs</b>. &nbsp;However, each organization will also have some unique differentiators or <b>uncommon beliefs</b>. &nbsp;Some of these beliefs are true &nbsp;and others are false. &nbsp;The true uncommon beliefs (<b>uncommon sense</b>) are key drivers of success. <br />
<br />
However, no one really knows the whole truth, so the article provides a unique perspective on how to use all beliefs to gain a strategic edge. The article suggest we could <b>discover</b>&nbsp;our uncommon true beliefs and focus on them. &nbsp;Or we could <b>discard</b>&nbsp;our uncommon false beliefs and again gain more strategic focus. We could also change the industry landscape by <b>neutralizing</b>&nbsp;commonly held beliefs. &nbsp;Or finally, we can exploit commonly held false beliefs to <b>maroon</b> competitors and gaining market share.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://cdn.mitsmr.com/files/2012/03/birkinshaw-s2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="381" src="http://cdn.mitsmr.com/files/2012/03/birkinshaw-s2.jpg" width="579" /></a></div>
So how does one actually find these beliefs in the first place? Once found, how does one evaluate whether beliefs are common or uncommon, true or false? It is very hard to do. &nbsp;I guess by constantly <a href="http://rdmanagement.blogspot.com/2010/06/how-do-innovators-think-our-editors.html">challenging the status quo</a>, being entrepreneurial and <a href="http://rdmanagement.blogspot.com/2010/07/confirmation-bias-in-r-management.html">encouraging questioning</a>. &nbsp;May be we could focus on some <a href="http://rdmanagement.blogspot.com/2010/06/management-innovation.html">innovation in management processes</a>?<br />
<blockquote class="tr_bq">
Finding a distinctive place in a competitive marketplace can be extremely challenging. Studying and working with dozens of companies across a range of industries, we have found that it frequently requires willingness on the part of top management to examine and re-examine the prevailing industry norms — and from a variety of perspectives.</blockquote>
&nbsp;Once you have found your beliefs, the only path to success is <a href="http://rdmanagement.blogspot.com/2010/05/experiements-boost-productivity.html">experimentation</a>:
<br />
<blockquote>
So how do companies put ideas they develop through our process into action? Based on our experience, successful companies don’t just talk about their novel beliefs or make risky bets on unproven ideas. Instead, they rely on a deliberate process of experimentation. They turn one of their novel beliefs into an operational hypothesis and then test it in as low-risk a way as possible. The feedback they get from the market informs their further testing, ultimately shaping the company’s decision to make a tangible change.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-45935249570320847862012-03-22T15:16:00.000-07:002012-03-23T00:33:30.435-07:00How to get the best from corporate R&DMIT Sloan Review has an interesting article about corporate functions (<a href="http://sloanreview.mit.edu/the-magazine/2012-spring/53304/are-ceos-getting-the-best-from-corporate-functions/?utm_source=WhatCounts+Publicaster+Edition&amp;utm_medium=email&amp;utm_campaign=Gen+Enews+March+20+2012&amp;utm_content=Are+CEOS+getting+the+best+from+corporate+functions%3f">Are CEOs Getting the Best From Corporate Functions?</a>). &nbsp;Many of the larger organizations I worked with have a central R&amp;D organization that focuses on longer term, disruptive or innovative research. &nbsp;Some of the lessons in the article are quite useful to these organizations. Overall it appears that most corporate functions feel that they are not tightly coupled in to the business and their performance is rarely evaluated for their true contributions:<br />
<blockquote>
In our survey, fewer than one in 10 function heads felt they had received sufficient guidance on how their function should contribute to the company’s overall strategy. Instead, they were expected to develop their own ideas and functional strategies.</blockquote>
The root cause seems to be poor strategic alignment and inadequate guidance from the executive team. The result is that the corporate functions become self serving and are not incentivized to provide practical support to business divisions:
<br />
<blockquote>
Without sufficient guidance, corporate functions can become — often unintentionally — self-serving. Instead of developing policies and processes to give divisions the practical support they want and need, corporate functions measure themselves against industrywide best practices or implement initiatives that increase their influence or simplify their own work. The result is often a lack of cooperation from operating managers.</blockquote>
Here is my interpretation of the four suggestions from the article to address this situation:<br />
<br />
<a name='more'></a><br />
1. Define key performance measures beyond division (P&amp;L) goals: Develop a strategy for how the corporation can function better. Express the strategy in three to seven sources of corporate value creation. Ask each corporate functions to develop a plan on how they will contribute to the said value creation. In case of corporate R&amp;D, this can be as simple as number of technologies or innovations transitioned into product development. We have discussed <a href="http://rdmanagement.blogspot.com/2010/07/performance-measurement-in-r.html">many such metrics for R&amp;D in the past</a>. &nbsp;We can even develop similar approaches for <a href="http://rdmanagement.blogspot.com/search?q=training">functions such as training</a>:
<br />
<blockquote>
A Danish company recently defined three main sources of added value at the corporate level: helping businesses make better capital investment decisions, ensuring that businesses drive down costs even in good years and building a pool of executive talent superior to its competitors’. All corporate functions were then asked to assess their activities against these objectives. Significant changes resulted.</blockquote>
2. Monitor and guide corporate function performance to meet the defined measures: The article suggests at least annual reviews to ensure that functions are progressing along the defined strategy. As we have discussed in the past, large reviews and meetings tend to <a href="http://rdmanagement.blogspot.com/2010/11/meetings-are-waste-of-time.html">waste a lot of time, so these reviews need to be focused</a>:
<br />
<blockquote>
Most companies occasionally conduct a major review of the size and value of the corporate headquarters. However these large-scale projects can engender a defensive response that gets in the way of the objective, and any staff reductions that result often disappear again in the following years. Annual reviews allow the CEO and the heads of divisions to nudge corporate functions regularly toward better performance.</blockquote>
3. Develop a comprehensive approach to corporate improvement initiatives: Many disjointed initiatives from different functions may reduce the effectiveness of initiatives AND reduce morale in corporate functions. We have discussed that organizations need to <a href="http://rdmanagement.blogspot.com/search/label/Change%20Management">build a sense of urgency</a> before taking on change initiatives. This article suggests that the corporations develop a central matrix of all ongoing initiatives and coordinate their impact:
<br />
<blockquote>
This helps different functions take an integrated approach and helps anticipate potential problems. For example, the CEO can see whether an initiative is likely to place unreasonable demands on an individual business unit, given the unit’s commercial pressures. The head of IT can assess whether IT resources are sufficient to support all initiatives.</blockquote>
4. Break out shared services from corporate functions: Pretty self explanatory. Services should be managed differently from functions.
<br />
<blockquote>
The result is often an order of magnitude change in performance: better service at lower cost in the shared-services division, as well as clearer policies and controls that focus on adding value within the remaining corporate functions. In the early 1990s, Shell was one of the first companies to create a separate services division, transforming its sprawling corporate functions into a headquarters team of 100 and a professional services division of some thousands. More recently, the Dutch specialty chemicals company DSM completed a major project to separate all of its corporate services into a shared-services division.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-26339156869949765992012-03-20T11:42:00.015-07:002012-03-26T16:21:01.413-07:00Globalization PenaltyFord recently announced it is investing $1B for a new plant in India (<a href="http://www.washingtonpost.com/world/asia_pacific/us-automakers-in-race-for-indian-market/2012/03/13/gIQAycoGLS_story.html">U.S. automakers in race for Indian market - The Washington Post</a>). Ford is going to change its strategy for the region and design new products designed specifically for the market:<br />
<blockquote>
This new focus on India has required something of a philosophical shift for America’s big auto manufacturers, a post-downturn realization that the old ways of doing business no longer guarantee success, said Michael Dunne, president of Dunne and Co., a Hong-Kong based investment advisory firm specializing in Asia’s car markets.<br />
In the past, U.S. carmakers tended to launch products in emerging markets that were successful in Europe “and anticipate that customers will trade up to the higher price level,” Dunne said."</blockquote>
The article points out that the Indian market is going to grow at more than 12% per year and Ford needs to ensure a share of that market. &nbsp;The effort to reduce product costs while still delivering reasonable products might even have some benefits to the core business from <a href="http://rdmanagement.blogspot.com/2010/05/necessity-is-mother-of-innovation.html">reverse innovation</a> or <a href="http://rdmanagement.blogspot.com/2010/06/frugal-engineering.html">frugal engineering</a>. <br />
<a name='more'></a>As we have discussed recently, the drive to reduce cost might even <a href="http://rdmanagement.blogspot.com/2012/02/necessity-is-mother-of-innovation.html">drive innovation</a> in general. &nbsp;However, there is some penalty to globalization as pointed out by McKinsey Quarterly (<a href="https://www.mckinseyquarterly.com/Organization/Strategic_Organization/Understanding_your_globalization_penalty_2833">Understanding your ‘globalization penalty</a>:<br />
<blockquote class="tr_bq">
The rapid growth of emerging markets is providing fresh impetus for companies to become ever more global in scope. Deep experience in other international markets means that many companies know globalization’s potential benefits—which include accessing new markets and talent pools and capturing economies of scale—as well <b>as a number of risks: creeping complexity, culture clashes, and vigorous responses from local competitors, to name just a few.</b></blockquote>
The article analyzes data from hundreds of thousands of employees to arrive at three major risks of globalization: 1) Dilution of company vision / focus, 2) Reduced innovation and learning and 3) Ineffective collaboration and partnership between locations.<br />
<br />
Clearly, having a larger product portfolio increases <a href="http://rdmanagement.blogspot.com/2010/06/key-challege-for-r-manages-manage.html">complexity</a>, which reduces focus, dilutes vision and increases risks to overall performance. <br />
<blockquote class="tr_bq">
Complicating matters further, our interviews suggested that, for most companies, about 30 to 40 percent of existing internal networks and linkages are ineffective for managing global–local trade-offs and instead just add costs and complexity.&nbsp;</blockquote>
We have also seen that&nbsp;<a href="http://rdmanagement.blogspot.com/2011/05/does-modularity-reduce-innovation.html">modularity can actually negatively impact innovation</a>. &nbsp;We have discussed some approaches to address&nbsp;<a href="http://rdmanagement.blogspot.com/2010/07/international-product-development.html">global product development</a>:<br />
<br />
Managing culture / training across a diverse organization is clearly more difficult which might account for the lack of learning. &nbsp;May be organizations need to improve <a href="http://rdmanagement.blogspot.com/2012/01/six-principles-of-effective-global.html">global talent management</a>? Or R&amp;D managers can get <a href="http://rdmanagement.blogspot.com/2011/04/sparking-creativity-in-teams.html">involved to increase creativity</a>. &nbsp;The article finds that motivation for team members actually improved under globalization. This is counter to some of the work from Wharton which suggest that&nbsp;<a href="http://rdmanagement.blogspot.com/2012/01/large-vs-small-team-performance.html">motivation reduces</a>&nbsp;as team size increases. &nbsp;May be&nbsp;<a href="http://rdmanagement.blogspot.com/2010/05/using-rivalry-to-spur-innovation.html">rivalry actually improves performance</a>?<br />
<br />
The other problem may be with collaboration between multicultural teams:<br />
<blockquote class="tr_bq">
Many companies, for example, can’t identify transferable lessons about low-income consumers in one high-growth emerging market and apply them in another. Some struggle to coalesce rapidly around market-specific responses when local entrants undermine traditional business models and disrupt previously successful strategies.</blockquote>
On the other hand, research shows that very little <a href="http://rdmanagement.blogspot.com/2010/06/how-to-manage-virtual-teams-magazine.html">dispersion is needed before a team becomes virtual</a>. &nbsp;Since the teams are likely virtual to start with, the only major challenge would be different cultures. &nbsp;We have discussed several approaches to improve multicultural team performance (<a href="http://rdmanagement.blogspot.com/2010/12/boosting-r-productivity.html">here</a> and <a href="http://rdmanagement.blogspot.com/2012/01/enhancing-multinational-multicultural.html">here</a>).Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-17487973605279680132012-03-19T11:37:00.059-07:002012-03-26T16:19:10.202-07:00Innovation at Bell Labs (The Idea Factory)A couple of articles in the Oil and Glory blog describe innovation at Bell Labs (<a href="http://oilandglory.foreignpolicy.com/posts/2012/03/15/book_review_jon_gertners_the_idea_factory">Book Review: Jon Gertner's "The Idea Factory"</a>&nbsp;and&nbsp;<a href="http://oilandglory.foreignpolicy.com/posts/2012/03/14/what_obama_should_learn_from_bell_labs">What Obama could learn from Bell Labs)</a>. &nbsp;Bell Labs, as the article points out, delivered many of the innovations that made modern devices possible:<br />
<blockquote class="tr_bq">
"The name Bell Labs is synonymous with cutting-edge invention, winning seven Nobel Prizes (including by Energy Secretary Steven Chu) and turning out world-changing inventions like the transistor (pictured above), the silicon photovoltaic solar cell and radio astronomy.&nbsp;</blockquote>
It is interesting to see that even fifty years back, Bell Labs had a clear understanding that innovation requires new technology and manufacturing processes integrated into a system that provides concrete <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-user.html">benefits for the &nbsp;user</a>:<br />
<blockquote class="tr_bq">
"It is not just the discovery of new phenomena, nor the development of a new product or manufacturing technique, nor the creation of a new market. Rather the process is all these things acting together in an integrated way toward a common industrial goal," he quotes Jack Morton, a Bell Labs engineer."</blockquote>
<br />
<a name='more'></a>Even the leadership had a definition of what innovation meant that could be easily communicated. As we have <a href="http://rdmanagement.blogspot.com/2010/06/secret-reason-your-employees-wont.html">discussed in the past</a>, if the leaders do not know what innovation is, how are they going to encourage it?:<br />
<blockquote class="tr_bq">
At Bell Labs, Mervin Kelly's shorthand definition of innovation was something that is "better, or cheaper, or both." If this succeeds, it will certainly fall into that category.</blockquote>
They even realized that the key to innovation is the ability to effectively address <a href="http://rdmanagement.blogspot.com/2010/06/key-challege-for-r-manages-manage.html">technological complexity</a> and then mask it in the user experience.<br />
<blockquote class="tr_bq">
"One of the more intriguing attributes of the Bell System was that an apparent simplicity -- just pick up the phone and dial -- hid its fiendish and increasing interior complexity," Gertner writes.&nbsp;</blockquote>
So, what made innovation happen at Bell Labs? &nbsp;The most important factor was vast resources (probably funded by AT&amp;T profits in addition to limitless government funding). &nbsp;These resources meant a large and brilliant work force had the freedom to pursue many problems. &nbsp;More importantly, they had a never ending <a href="http://rdmanagement.blogspot.com/2012/02/necessity-is-mother-of-innovation.html">stream of challenges</a>&nbsp;that focused innovation:<br />
<br />
<blockquote class="tr_bq">
Structurally, what defined Bell Labs was a large, brilliant, interdisciplinary work force that was supplied with freedom and vast resources and a never-ending stream of technical problems within the phone system that drew on the staff's expertise.&nbsp;</blockquote>
As we have discussed in the past, <a href="http://rdmanagement.blogspot.com/2012/03/how-can-r-management-help-exploit.html">innovation happens at the intersection of technologies</a>. &nbsp;The Bell Labs model encouraged informal interactions between multiple disciplines and the abundance of resources facilitated <a href="http://rdmanagement.blogspot.com/2010/05/experiements-boost-productivity.html">experimentation</a>:<br />
<blockquote class="tr_bq">
In Bell Labs' old days, an informal exchange of ideas (over lunch, during a stroll in the hallways, and so forth) was part of the innovation process. At universities and research institutions everywhere, it still is.</blockquote>
Furthermore, business processes were flexible enough to allow a variety organizational structures to <a href="http://rdmanagement.blogspot.com/2011/04/nurturing-disruptive-innovation.html">nurture innovation in multiple ways</a>&nbsp;- any thing from three person groups to very large teams:<br />
<blockquote class="tr_bq">
With an invention like the transistor, Bell Labs used an orchestrated effort and a mid-sized team; but the silicon solar cell was quite different. Indeed, the latter breakthrough was serendipitous: Three men, each working in different buildings, somehow connected the right technology with the right problem at the right time. Meanwhile, later innovations such as cellular phone networks and the development of fiber optic systems required vast teams of hundreds of people. I think all these approaches -- perhaps with the exception of the solar cell -- were quite targeted, and are thus still viable today.&nbsp;</blockquote>
So what can we learn from Bell Labs? &nbsp;The author is uncertain. &nbsp;I think we would be hard pressed to show a business case for the level of investment. &nbsp;It is true that a lot of great innovations came out of the organization. However, we tend to forget major failures.<br />
<blockquote class="tr_bq">
More important, perhaps, was that the Labs management at times made big errors in judging what technologies to pursue for the future. In my book I focus on two in particular: the waveguide and the Picturephone.&nbsp;</blockquote>
Also, it is easy to forget that not everyone working at the lab was an innovator and the management really knew how to enable success. <br />
<blockquote class="tr_bq">
And I think that's a mistake. Bell Labs was not a great experience for everyone employed there; there were internal politics, personality clashes, miscommunications, and every other problem that affects a big organization.&nbsp;</blockquote>
Much more importantly, the world has changed quite a bit in the last few decades and the idea of a walled garden for innovation probably will not be successful in the current environment.<br />
<br />
<blockquote class="tr_bq">
Research efforts are expected to move faster today, and there seems to be a lower tolerance for failure, especially if any public funding is involved. Also, an ability (or willingness) to invest for the distant future, and to thus work with a new technology through an arduous and expensive development process, seems to be in shorter supply.&nbsp;</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-79521555992877422122012-03-17T17:55:00.000-07:002012-03-17T17:55:41.813-07:00Courier: R&D Planning & Portfolio Management at MicrosoftI have been meaning to write about development and cancellation of Courier, an innovative tablet concept from&nbsp;&nbsp;Microsoft. &nbsp;The <a href="http://news.cnet.com/8301-10805_3-20128013-75/the-inside-story-of-how-microsoft-killed-its-courier-tablet/">c|net article</a>&nbsp;on the subject provides quite a bit of useful information - both about innovation management best practices and some opportunities for improvement. &nbsp;Courier was developed at Microsoft's Skunkworks (Pioneer Studios). &nbsp;They invested quite a bit of resources in the concept (130 employees and $25M in funding). &nbsp;The concept was very well received (See&nbsp;<a href="http://gizmodo.com/5365299/courier-first-details-of-microsofts-secret-tablet">Courier: First Details of Microsoft's Secret Tablet</a>&nbsp;in Gizmodo):<br />
<blockquote class="tr_bq">It feels like the whole world is holding its breath for the Apple tablet. But maybe we've all been dreaming about the wrong device. This is Courier, Microsoft's astonishing take on the tablet.</blockquote><div class="separator" style="clear: both; text-align: center;"><a href="http://www.blogcdn.com/www.engadget.com/media/2010/03/03-05-10courier.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="242" src="http://www.blogcdn.com/www.engadget.com/media/2010/03/03-05-10courier.jpg" width="320" /></a></div>However, they had to cancel the product because it did not fit into Microsoft's product portfolio (See&nbsp;<a href="http://www.engadget.com/2010/04/29/microsoft-confirms-kills-courier-in-one-fell-swoop/">Microsoft confirms, kills Courier in one fell swoop -- Engadget</a>):<br />
<blockquote class="tr_bq">Well this is depressing. Word has just gone fluttering out of Redmond that work on the Courier project -- a heretofore rumored dual-screen tablet which rightfully set the tech world ablaze -- has been spun down by the company.</blockquote>It is unclear which, if any, technologies developed as part of the innovation project ever got transitioned into the rest of the portfolio. &nbsp;The cancellation led to significant organizational strife and hard feelings. &nbsp;I think R&amp;D managers can learn a lot from this event. <br />
<blockquote>Courier's death also offers a detailed look into Microsoft's Darwinian approach to product development and the balancing act between protecting its old product franchises and creating new ones. The company, with 90,000 employees, has plenty of brilliant minds that can come up with revolutionary approaches to computing. But sometimes, their creativity is stalled by process, subsumed in other products, or even sacrificed to protect the company's Windows and Office empires.</blockquote>So lets dig in...<br />
<a name='more'></a>As we have discussed in the past (<a href="http://rdmanagement.blogspot.com/2010/07/r-portfolio-management-case-study.html">here</a> and <a href="http://rdmanagement.blogspot.com/2010/07/update-on-portfolio-management-case.html">here</a>), Microsoft's portfolio process seems to be driven by senior executive champions. In case of tablets, there were two competing groups led by two senior executives working on competing products.<br />
<blockquote class="tr_bq">One group, led by Xbox godfather J Allard, was pushing for a sleek, two-screen tablet called the Courier that users controlled with their finger or a pen. But it had a problem: It was running a modified version of Windows.<br />
That ran headlong into the vision of tablet computing laid out by Steven Sinofsky, the head of Microsoft's Windows division. Sinofsky was wary of any product--let alone one from inside Microsoft's walls--that threatened the foundation of Microsoft's flagship operating system. But Sinofsky's tablet-friendly version of Windows was more than two years away.</blockquote>The senior executive ownership has some benefits: They get to ensure the product received the right kind of focus and resources to get it to market.&nbsp;&nbsp;The approach may help overcome the <a href="http://rdmanagement.blogspot.com/2010/08/valley-of-death-in-product-innovation.html">valley of death</a> in innovation maturation. &nbsp;However, it also a key disadvantage: disconnected and conflicting projects in the R&amp;D portfolio:<br />
<blockquote class="tr_bq">The Courier group wasn't interested in replicating Windows on a tablet. The team wanted to create a new approach to computing.</blockquote>The two lines of R&amp;D were somewhat incompatible and underlying culture of executive champions prevented &nbsp;integrated portfolio management. &nbsp;Microsoft's CEO, Steve Ballmer, had to call in Bill Gates to determine the path forward. &nbsp;Gates did a product review and did not come out in favor of the new innovation (because of how far it was from the traditional Windows/Office business model):<br />
<blockquote>"This is where Bill had an allergic reaction," said one Courier worker who talked with an attendee of the meeting. As is his style in product reviews, Gates pressed Allard, challenging the logic of the approach.<br />
...<br />
Within a few weeks, Courier was cancelled because the product didn't clearly align with the company's Windows and Office franchises, according to sources.</blockquote>The cancellation had a significant immediate impact on Microsoft's business:<br />
<blockquote class="tr_bq">Rather than creating a touch computing device that might well have launched within a few months of Apple's iPad, which debuted in April 2010, Microsoft management chose a strategy that's forcing it to come from behind. The company cancelled Courier within a few weeks of the iPad's launch. </blockquote>Furthermore, the move away from innovation had a long-term impact on the product development cycle and the product portfolio at Microsoft:<br />
<blockquote class="tr_bq">But using Windows as the operating system for tablets also implies that Microsoft will update the devices' operating systems on the Windows time frame, typically every three years. Compare that to Apple, which seems likely to continue to update the iPad annually, a tactic that drives a raft of new sales each time a new generation hits the market. By the time Windows 8 rolls out, Apple will likely have introduced its iPad 3. Moreover, Amazon's much anticipated Kindle Fire tablet, which goes on sale November 15, will have nearly a year head start on the Windows-powered tablet offerings.</blockquote>So what if anything could have been done differently and what can we learn from this? &nbsp;First, many companies try to overcome the <a href="http://rdmanagement.blogspot.com/2010/12/innovation-machine.html">bureaucracy of a large organization</a> by creating skunkworks (See <a href="http://rdmanagement.blogspot.com/2011/06/nokias-troubles-arise-from.html">Nokia</a>). &nbsp;The idea was similar at Microsoft:<br />
<blockquote class="tr_bq">The gadget was the creation of Allard's skunkworks design operation Pioneer Studios and Alchemie Ventures, a research lab that also reported to Allard. (The lab took the German spelling of "alchemy" to highlight the stereotypical Teutonic traits of structure and regiment it hoped to bring to its innovation process.) </blockquote>However, Skunkworks like environments are hard to integrate into the overall culture. &nbsp;They tend to become quite segregated causing many of the innovations wither on the vine:<br />
<blockquote class="tr_bq">Allard created a fantasyland inside Microsoft where Apple fanboys could tinker on stylish products that would never see the light of day. They point to the opulent 36,000-square foot office of Pioneer Studios, headquartered in Seattle's Pioneer Square, that featured huge open spaces, dotted with cushy Eames lounge chairs, angular white desks, blond wood floors, and exposed brick walls. It may have been 16 miles from Microsoft's far more corporate Redmond, Wash., campus, but it was a galaxy away in terms of workplace design.</blockquote>Clearly, Pioneer studios had envisaged this scenario and tried to form <a href="http://rdmanagement.blogspot.com/2011/03/why-project-networks-beat-project-teams.html">project networks</a> that brought innovation cultures to the rest of the company:<br />
<blockquote class="tr_bq">He encouraged employees to seek out new colleagues with diverse backgrounds who could challenge Microsoft's conventions and push the company to approach new opportunities in different ways.</blockquote>Microsoft made an effort to implement a structured innovation management process:<br />
<blockquote class="tr_bq">Allard created Alchemie to focus on innovation process to make sure that the efforts of Pioneer were not scattershot. It studied best practices, both within and outside Microsoft, to "design a repeatable, predictable and measurable approach for building new business"&nbsp;</blockquote>Additionally, they integrated some cutting-edge innovation management practices such as clear timeline for technology insertion and a stage gate process to ensure the innovation projects do not spin to far from reality:<br />
<blockquote class="tr_bq">In fact, one of the mandates of Alchemie was to look only at product ideas and business concepts that were no farther than three years into the future. The Alchemie book includes something of an innovation process road map that lays out four "gates" that ideas needed to pass through to move from incubation to product development. And a source said that Courier had made it through all four gates.</blockquote>Another interesting concept they implemented was clearly <a href="http://rdmanagement.blogspot.com/2012/02/necessity-is-mother-of-innovation.html">defined purpose</a> and freedom to explore new solutions:<br />
<blockquote class="tr_bq">"Infuse them with our purpose," Allard wrote. "Give them the tools. Give them lots of rope. Learn from them. Support where they take you. Invite them to redefine The Tribe."</blockquote>The Courier team also had a well defined mission - Free Create - that further focus development:<br />
<blockquote class="tr_bq">The phrase at the core of the Courier mission was "Free Create." It was meant to describe the notion of eliminating the processes and protocols that productivity software often imposes on workers.</blockquote>The idea of Free Create was imbued into the entire development process - which is a great idea. &nbsp;Not sure of the business case for traveling to Milan to understand Moleskine...<br />
<blockquote class="tr_bq">The metaphor they used was "digital Moleskine," a nod to the leather-bound notebooks favored in the design world. In fact, according to a few team members, a small group led by Petschnigg flew to Milan, Italy, to pick the brains of the designers at Moleskine to understand how they've been able to create such loyal customers.</blockquote>One more interesting concept about Innovation Management was implemented: Disconnected prototypes allowing different subsystems to mature separately. This approach is advantageous in that it <a href="http://rdmanagement.blogspot.com/2010/05/why-dont-businesses-experiment-more.html">allows more experimentation</a>&nbsp;and we have seen that <a href="http://rdmanagement.blogspot.com/2010/05/experiements-boost-productivity.html">experiments boost productivity</a>. &nbsp;Steve Jobs followed a <a href="http://rdmanagement.blogspot.com/2011/05/steve-jobs-methodology-for-apple-r.html">similar approach when developing the iPhone</a>.<br />
<blockquote class="tr_bq">When Courier died, there was not a single prototype that contained all of the attributes of the vision: the industrial design, the screen performance, the software experience, the correct weight, and the battery life. Those existed individually, created in parallel to keep the development process moving quickly. Those prototypes wouldn't have come together into a single unit until very late in the development process, perhaps weeks before manufacturing, which is common for cutting-edge consumer electronics design. But on the team, there was little doubt that they were moving quickly toward that final prototype.</blockquote>It appears that the Courier team made significant progress (and used significant resources along the way):<br />
<blockquote>Courier was much more than a clever vision. The team, which had more than 130 Microsoft employees contributing to it, had created several prototypes that gave a clear sense about the type of experience users would get. <br />
It's clear there were substantial resources behind the effort. The commemorative book, designed to resemble the journal-like look of the Courier, lists the 134 employees who contributed to the gadget's creation. Moreover, Petschnigg writes on his LinkedIn profile page that he "managed $3.5 (million) seed funding, (and) secured $20 (million) to develop this new product category."</blockquote>However, there was a clear lack of coordination at the product portfolio level and there were no processes to align development plans across different product lines or R&amp;D projects:<br />
<blockquote class="tr_bq">Early on, the group opted to use Windows for Courier's operating system. But it wasn't a version of Windows that any consumer would recognize. The Courier team tweaked the operating system to make sure it could perform at high levels with touch- and pen-based computing. What's more, the graphical shell of Windows--the interface that computer users associate with the operating system--was entirely removed. So while it was Windows under the hood, the home screens bore zero resemblance to the familiar PC desktop.</blockquote>This is a key problem with the Skunkworks innovation concept. &nbsp;A separate culture quickly becomes insular and product lines divergences can not be reconciled:<br />
<blockquote class="tr_bq">"A big lesson is that it may be easier to go into your quiet space and incubate. But when you want to get bigger and get more resources, you want to make sure you're aligned," a Courier team member said. "If you get Sinofsky on board from the start, you're probably going to market."</blockquote>So the challenge again appears to be with Microsoft's R&amp;D planning and portfolio management process. &nbsp;It is relatively easy to become innovative (may be not $25M, but at least to some level), however, it is not easy to align product portfolios to bring innovation to market:<br />
<blockquote class="tr_bq">For Courier to come to life, the team creating it would have to convince the Microsoft brass that the device would offer the company substantial opportunities that Windows 8 could not. In the end, that proved to be too large a hurdle for J Allard, Courier's leader and Microsoft's chief consumer technology visionary.&nbsp;</blockquote>One way to address this challenge is to have more detailed R&amp;D plans that can be shared and linked across different product lines. &nbsp;These plans could have allowed teams to decide how they can bring different development paths together over time without an outright cancellation of Courier. &nbsp;Well communicated plans and roadmaps could have facilitated collaboration between Courier and Windows 8 teams. &nbsp;This&nbsp;collaboration&nbsp;could have ensured that more of the technologies developed under courier could have been integrated into Windows 8. &nbsp;This unfortunately did not happen. <br />
<blockquote>It's unclear what, if any, pieces of the Courier technology are finding their way into other Microsoft products. </blockquote>The only way any new innovation got introduced to Microsoft was through unmanaged diffusion:<br />
<blockquote class="tr_bq">Courier team members scattered. Many moved on to other products at Microsoft, such as Xbox, Windows Phone, and Bing.Others are involved with different incubation efforts at the company.&nbsp;</blockquote>A final lesson could be <a href="http://rdmanagement.blogspot.com/search/label/Portfolio%20Management">better portfolio management processes</a>&nbsp;such as&nbsp;more frequent portfolio reviews where executives could have either reconciled development plans or <a href="http://rdmanagement.blogspot.com/2012/03/apples-r-portfolio-strategy-get-rid-of.html">eliminated the project</a> before significant resources and emotions were invested:<br />
<blockquote class="tr_bq">And a few employees who contributed to the product's development have left the company altogether, joining other tech firms such as Amazon, Zynga, and Facebook.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com5tag:blogger.com,1999:blog-6194977843764799641.post-6769566181857801372012-03-13T17:28:00.000-07:002012-12-03T00:13:40.651-08:00Rethinking knowledge management for R&D teamsAs we know, R&amp;D is focused on generating knowledge. &nbsp;Unlike manufacturing, where the outcome is products, R&amp;D generates knowledge about how to build those products. &nbsp;Hence R&amp;D workers are all by definition&nbsp;knowledge&nbsp;workers. The article&nbsp;<a href="https://www.mckinseyquarterly.com/Organization/Strategic_Organization/Rethinking_knowledge_work_A_strategic_approach_2739">Rethinking knowledge work: A strategic approach</a>&nbsp;from McKinsey Quarterly has a very thorough discussion about IT tools needed to help improve the&nbsp;productivity&nbsp;of knowledge workers.<br />
<blockquote>
In the half-century since Peter Drucker coined the term “knowledge workers,” their share of the workforce has steadily grown—and so has the range of technology tools aimed at boosting their productivity. Yet there’s little evidence that massive spending on personal computing, productivity software, knowledge-management systems, and much else has moved the needle. <b>What’s more, a wide variety of recent research has begun suggesting that always-on, multitasking work environments are so distracting that they are sapping productivity. </b></blockquote>
As we can all relate, what information is provided to R&amp;D teams is far more important than how much. &nbsp;In fact, we need to reduce the information overload.<br />
<blockquote>
It’s time for companies to develop a strategy for knowledge work—one that not only provides a clearer view of the types of information that workers need to do their jobs but also recognizes that the application of technology across the organization must vary considerably, according to the tasks different knowledge workers perform.</blockquote>
<br />
<a name='more'></a>The article defines two approaches for providing knowledge (information) to R&amp;D teams: 1) Free access where team members have access to the entire knowledgebase and hopefully select the information they need and 2) Structured access where information is prefiltered for the team member.<br />
<blockquote>
Few executives realize that there are two divergent paths for improving access to the information that lies at the core of knowledge work. The most common approach, giving knowledge workers free access to a wide variety of tools and information resources, presumes that these employees will determine their own work processes and needs. The other, the structured provision of information and knowledge, involves delivering them to employees within a well-defined context of tasks and deliverables. Computers send batches of work to employees and provide the information needed to do it.</blockquote>
Free Access is the model employed by most R&amp;D organizations because of their ease of implementation:<br />
<br />
<blockquote class="tr_bq">
The information technology behind the free-access model is relatively easy to implement. The Internet and social media are readily accessible to anyone, and access to third-party databases is possible with any Web browser—although closed company cultures sometimes impede knowledge sharing.</blockquote>
Clearly, most R&amp;D workers know are knowledgeable and know what information they want. &nbsp;However, the problem with free access is the volume of information that one obtains when one starts looking for knowledge.<br />
<br />
<blockquote class="tr_bq">
The problems of free access are fairly obvious: while workers may know how to use technology tools, they may not be skilled at searching for, using, or sharing the knowledge. One survey revealed that over a quarter of a typical knowledge worker’s time is spent searching for information. Another found that only 16 percent of the content within typical businesses is posted to locations where other workers can access it. Most knowledge workers haven’t been trained in search or knowledge management and have an incomplete understanding of how to use data sources and analytical tools.</blockquote>
The problem of searching for relevant information is exasperated even more in the R&amp;D environment. &nbsp;An employee searching for thermal cracking problems in an engine block will find all documents that have the words thermal and cracking. &nbsp;Even when narrowed down, thermal cracking may be related to very different mechanisms. &nbsp;The employee will likely give up the search and start working from scratch instead of digging through voluminous design documents. &nbsp;This was a common problem I faced when I was trying to investigate failure modes in past systems to generate more robust designs. &nbsp;A key answer would be to structure and filter the knowledge so that only the&nbsp;relevant&nbsp;information is displayed.<br />
<blockquote class="tr_bq">
"Structured-provision technologies first appeared in the early 1990s and have improved considerably of late. They often have a range of functions. The most important is workflow technology that controls how knowledge workers get information and job tasks. These workers may encounter supporting technologies that include information portals, business rules or algorithms to automate decisions, document- or content-management systems, business process management-and-monitoring systems, and collaboration tools. Increasingly modular component designs make these technologies easier to deploy."</blockquote>
Structured access has had some success in simple knowledge work like mortgage application processing or insurance claims processing:<br />
<blockquote class="tr_bq">
Productivity is the major benefit: as measured by the completion of key tasks per unit of work time, it often rises by 50 percent when organizations implement these technologies. One automobile-leasing company, for example, achieved such gains after it implemented a new system for lease processing and end-of-lease sale offers. The reason for the improvement was that workers had few distractions and spent no time searching for information.</blockquote>
The key disadvantage of structured access is that by definition it reduces direct interaction between workers. &nbsp;Furthermore, it requires a well defined process that can be automated to structure the knowledge.<br />
<blockquote class="tr_bq">
In structured information environments, computer systems rather than knowledge workers integrate the work, so extensive system and process design is required up front for implementation. While these systems can be tailored to fit complex business processes, that kind of tight fit can become a problem if business environments or processes change.</blockquote>
This is easy to do in simple tasks but very difficult to do for complex R&amp;D. &nbsp;Some work has been done in structuring interactions for systems engineering requirements management. &nbsp;However, I am not sure of any tool that can structure access for R&amp;D environment (beyond those developed by my firm In<a href="http://inspird.com/">spiRD</a>.)&nbsp; &nbsp;The article provides a useful framework to analyze what type of access would be&nbsp;beneficial&nbsp;in which environment.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-aVoOKhCtsRI/T1_fE_kKL8I/AAAAAAAAAv8/hX0zCdIVD68/s1600/Picture1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="265" src="http://3.bp.blogspot.com/-aVoOKhCtsRI/T1_fE_kKL8I/AAAAAAAAAv8/hX0zCdIVD68/s400/Picture1.png" width="400" /></a></div>
R&amp;D clearly falls under the top right corner of this 2x2,. &nbsp;I would contend that even under that scenario, some amount of structure is absolutely critical to effectiveness. &nbsp;In fact, we need a hybrid approach where the IT systems filters and narrows the search results for the team member. &nbsp;It then provides free access only to the relevant information so that the R&amp;D team member can reuse past development.<br />
<blockquote class="tr_bq">
Another way of smoothing the path to structure is letting knowledge workers use familiar, typically free-access tools when they interact with a structured system. To alert them when it’s time to use a structured application, for example, have it send them an e-mail. If a structured task requires, say, passing financial information to and from the system, let workers use a spreadsheet. Always remember: high-end knowledge workers don’t want to spend all their working hours interacting with automated tools.</blockquote>
Limiting choices in a hybrid approach, if implemented correctly can actually enhance collaboration and interaction. &nbsp;If team members are overwhelmed by the amount of information and start redeveloping technologies, free access will reduce interactions - not enhance&nbsp;collaboration. By limiting choices, we might be able to encourage R&amp;D teams to engage in productive purpose driven communication and build <a href="http://rdmanagement.blogspot.com/2011/03/why-project-networks-beat-project-teams.html">networks</a>. <br />
<blockquote class="tr_bq">
We live in a world where knowledge-based work is expanding rapidly. So is the application of technology to almost every business process and job. But to date, high-end knowledge workers have largely remained free to use only the technology they personally find useful. It’s time to think about how to make them more productive by imposing a bit more structure. This combination of technology and structure, along with a bit of managerial discretion in applying them to knowledge work, may well produce a revolution in the jobs that cost and matter the most to contemporary organizations.</blockquote>
Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-13161344303679339962012-03-10T10:45:00.001-08:002012-03-26T16:50:20.386-07:00An example of a good R&D planAs we have discussed in the past, <a href="http://rdmanagement.blogspot.com/2012/02/why-effective-r-management-is.html">R&amp;D management is challenging</a>&nbsp;because most new products require many technologies to mature simultaneously and many engineering disciplines to work together. The only real answer to effective R&amp;D management is effective R&amp;D plans. &nbsp;R&amp;D planning remains very hard and we have been discussing <a href="http://rdmanagement.blogspot.com/2012/03/roadmaps-as-foundation-for-effective-r.html">some approaches to address them</a>.<br />
<ol>
<li>Good R&amp;D plans have multiple milestones with clearly defined objectives at System AND Technology level. &nbsp;These milestones bring constituent technologies together to evaluate / guide integration. &nbsp;</li>
<li>Good plans drive reuse of development between various development projects to reduce development costs and improve efficiency. &nbsp;</li>
<li>Good plans have multiple points of insertion from technologies into delivered products - i.e. Different subsystems from different development projects mature at different times and get inserted into delivered products. &nbsp;These multiple insertion paths reduce long-term risks and improve return on investment.</li>
</ol>
I have been looking for good examples of effective R&amp;D plans. &nbsp;The article&nbsp;<a href="http://techon.nikkeibp.co.jp/english/NEWS_EN/20120309/208279/">Mitsubishi Integrates Inverter With EV Motor System</a>&nbsp;from Tech On discusses demonstration of a new product under development:<br />
<a name='more'></a><br />
<blockquote class="tr_bq">
"Mitsubishi Electric Corp developed a motor system whose output power is more than 70kW for electric vehicles (EVs) by integrating an inverter and a motor on the same axis."</blockquote>
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<a href="http://techon.nikkeibp.co.jp/english/NEWS_EN/20120309/208279/11.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="279" src="http://techon.nikkeibp.co.jp/english/NEWS_EN/20120309/208279/11.jpg" width="320" /></a></div>
<br />
This integration has many benefits including reduced volume, reduced weight and improved installation among others. <br />
<blockquote>
The integration enabled to shorten electric lines between the inverter and motor as well as to integrate pipes for water cooling that are required for each of the inverter and motor in the old system.<br />
The mass of the new system is about 10% less than that of the old one. And the total efficiency of the new system is 3-5 points higher than that of the old system under the JC08 test mode.</blockquote>
This demonstrates one aspect of a good R&amp;D plan: Clearly delineated objectives and goals. &nbsp;These goals should be measurable so that progress can be evaluated at multiple points along the development pipeline. The company plans to commercialize the system only in 2017. &nbsp;However, they are demonstrating some of the capabilities in the integrated system in 2012! &nbsp;It is important to address integration challenges early and not wait till technology development is complete.<br />
<br />
It is also important to identify major development hurdles and clearly define targets for technology development. &nbsp;In this case, the company has identified heat from the inverter as the key challenge and identified multiple technology development paths to address it. &nbsp;<a href="http://rdmanagement.blogspot.com/2012/02/necessity-is-mother-of-innovation.html">This clarity drives innovation</a>:<br />
<blockquote class="tr_bq">
Because the motor and inverter generate a large amount of heat, the company not only increased cooling capability but also made improvements to each of the motor and inverter to reduce heat generation. Specifically, it changed the magnetic design of the motor and employed a silicon carbide (SiC)-based power device for the inverter. With the SiC-based power device, the loss of the inverter was reduced by half, compared with the inverter of the old system that uses a silicon (Si)-based power device.</blockquote>
Since development of power devices is expensive, they have insertions of the SiC devices before the final system delivery. &nbsp;Multiple insertion paths reduce the risk of wasted development effort:<br />
<blockquote class="tr_bq">
The company aims to commercialize the system in 2017. And it plans to commercialize an EV motor system whose inverter using a Si-based power device and motor are separated in 2014.</blockquote>
Finally, there are incremental objectives for development at each stage, further enhancing management's ability to monitor and guide R&amp;D:<br />
<blockquote class="tr_bq">
Currently, the motor system can be used for rotating tires and for simulated driving based on actual driving patterns in a laboratory. To commercialize the system, it is necessary to improve its structure for volume production, fine-tune it and further reduce its weight by 10 to 20%, Mitsubishi Electric said.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com2tag:blogger.com,1999:blog-6194977843764799641.post-39910296636784502342012-03-09T12:31:00.000-08:002012-03-09T12:31:41.338-08:00The Influence of Prior Industry Affiliation on Framing in Nascent IndustriesA very useful paper from the&nbsp;HBS Working Knowledge about&nbsp;<a href="http://hbswk.hbs.edu/item/6408.html">The Influence of Prior Industry Affiliation on Framing in Nascent Industries</a>&nbsp;explores the digital camera market to identify some useful trends in firms entering new markets:<br />
<blockquote class="tr_bq">New industries sparked by technological change are characterized by high uncertainty. In this paper we explore how a firm's conceptualization of products in this context, as reflected by product feature choices, is influenced by prior industry affiliation. We study digital cameras introduced from 1991 to 2006 by firms from three prior industries. </blockquote>The paper hypothesizes that firms entering new industries tend to continue to behave like the industry from which they originate.&nbsp;A unique perspective and one that can be useful for all of us to understand because the <a href="http://rdmanagement.blogspot.com/2010/10/impact-of-corporate-mind-set-on-new.html">corporate mindset is critical to how products get launched</a>.<br />
<blockquote class="tr_bq">We hypothesize and find first, that prior industry experience shapes a set of shared beliefs resulting in similar and concurrent firm behavior; second, that firms notice and imitate the behaviors of firms from the same prior industry; and third, that as firms gain experience with particular features, the influence of prior industry decreases. This study extends previous research on firm entry into new domains by examining heterogeneity in firms' framing and feature-level entry choices.</blockquote>Let us dig to see what we can learn...<br />
<a name='more'></a>R&amp;D has to always address uncertainty when developing new products. We have to experiment with product configurations, functions and technologies. However, new industries are even more challenging:<br />
<blockquote>Potential customers have little or no experience with products, and their preferences are therefore unformed and unarticulated. Even basic assumptions about what the product is and how it should be used are subject to debate. Similarly, from a technological perspective, uncertainty exists about the rate of performance improvement of the new technology, how components of a technological system will interact, and whether different technological variants will work at all. Market and technological uncertainty are often compounded by competitive uncertainty as firms grapple with shifting industry boundaries and the convergence of firms from previously distinct domains.</blockquote>The paper intends to analyze and explain how different firms decide to enter new markets and what drives them to be different from each other (heterogeneity). The digital camera industry studied by the authors is quite appropriate because it was at the confluence of multiple technologies / markets:<br />
<blockquote>...the emergence of consumer digital cameras was characterized by high uncertainty and the entry of firms from three prior industries, photography, computing, and consumer electronics, enabling a comparison of the influence of firm background on decisions about which features a digital camera should include.</blockquote>This interesting. &nbsp;Digital cameras needed expertise from many different segments: Image Sensors (semiconductor), Optics, Digital Processing, Displays, User Experience (how a camera takes pictures - forte of vendors such as Nikon), film (Kodak) and consumer electronics (including mobile phones). &nbsp;Market entrant from each participating industry segment approached the market based on their predispositions:<br />
<blockquote>We find that prior industry affiliation had a significant influence on a firm’s initial framing of the nascent product market. Qualitative data indicate that digital camera product concepts and expected uses varied systematically, ranging from an analog camera substitute (photography firms), to a video system component (consumer electronics firms), to a PC peripheral (computing firms) before converging on a product concept that included elements of all three frames.</blockquote>Also, different entrants from the same industry focused on similar products (based on their prior belief). However, as participants gained more experience with a particular product, they moved away from behavior corresponding to their previous industry - following a three stage model including an era of ferment, convergence on a dominant design, and an era of incremental change:<br />
<blockquote>Our results suggest that firms from the same prior industry shared similar beliefs about what consumers would value as reflected in their concurrent introduction of features -- firms were significantly more likely to introduce a feature, such as optical zoom, to the extent that other firms from the same prior industry entered with the feature in the same year, whereas concurrent entry by firms from different prior industries had no influence. Firms were also likely to imitate the behavior of firms from the same prior industry, as opposed to that of firms from different prior industries in introducing some, but not all features. Finally, we find that as a firm’s experience with a particular feature increased, the influence of prior industry decreased.</blockquote>The paper suggest that industry level (or at least multi-participant) beliefs are important because they tend to shape the industry and the competitive landscape. Sometimes inability to develop all product features allows new entrants in the market. For example, few firms were able to integrate digital cameras with GPS locations &nbsp;and provide a new user experiences. &nbsp;It took Apple to combine a touch screen display with a media player in a mobile phone. In new industries R&amp;D managers lack a detailed understanding of customer preferences (they have not evolved yet) and hence the prior experience becomes even more important. May be we should focus on <a href="http://rdmanagement.blogspot.com/2012/03/how-can-r-management-help-exploit.html">thematic similarities</a> a bit more to address this competitive weakness in traditional R&amp;D management models. An approach focused on how customer would use the product and its features would help the exploration of thematic similarity (may be we can learn from <a href="http://rdmanagement.blogspot.com/2011/03/apple-r-and-steve-jobs-methodology-user.html">Steve Jobs</a>) .Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-22925920972537206902012-03-06T10:22:00.000-08:002012-03-26T16:51:26.636-07:00CEO says Ford won't back off R&D spendingI have been gathering data about corporate response to difficult market conditions, especially the impact on R&amp;D spending. &nbsp;Tough times impact every aspect of an organization's operations and they have <a href="http://rdmanagement.blogspot.com/2010/08/tough-times-spur-shifts-in-corporate-r.html">changed R&amp;D spending</a> as well (reduce focus on long-term R&amp;D). &nbsp;Even so, organizations tend to fight to maintain R&amp;D spending levels. &nbsp;We have seen that CEO of companies such as <a href="http://rdmanagement.blogspot.com/2010/06/r-at-3m.html">3M have maintained R&amp;D spending</a> despite the downturn. Here is another data point from the Marketwatch post&nbsp;<a href="http://www.marketwatch.com/story/ceo-says-ford-wont-back-off-rd-spending-2012-03-06">CEO says Ford won't back off R&amp;D spending</a>:<br />
<blockquote class="tr_bq">
Ford Motor Co. CEO Alan Mulally said Tuesday at the Geneva Motor Show that the auto maker will focus not on forging further alliances in Europe to help drive growth but <b>on continuing to invest heavily in new products</b>. "We have never backed off, even through this entire recession," he said. "We actually have increased investment in our new vehicles during the toughest of times.</blockquote>
As a background, the European slowdown is likely to lead to a $0.6B loss in Ford's European operations (<a href="http://www.seattlepi.com/business/article/Ford-launches-B-Max-subcompact-3384924.php">Ford launches B-Max subcompact - seattlepi.com</a>):<br />
<blockquote class="tr_bq">
Ford will focus on cost containment to return to profitability until demand is restored, but he declined to speculate on possible measures. Booth said Ford Europe could lose $500 to $600 million dollars this year, after recording losses of $190 million in the last quarter of 2011.</blockquote>
Interestingly, the cost cuts are going to be in manufacturing operations rather than R&amp;D - especially since R&amp;D has probably more flexibility. &nbsp;Even more importantly, we have discussed many times that <a href="http://rdmanagement.blogspot.com/2012/01/boozes-2011-global-innovation-1000.html">how you spend on R&amp;D is far more important than how much</a>. &nbsp;In fact, many leaders such as CTOs of <a href="http://rdmanagement.blogspot.com/2010/05/r-spending-cuts-sharpen-vision.html">Texas Instruments</a> and <a href="http://rdmanagement.blogspot.com/2011/05/pfizer-says-24-cut-in-r-is-good-for.html">Pfizer</a> have found that R&amp;D cost cuts actually improved results! <br />
<a name='more'></a>The effort to maintain budgets is even more surprising in light of the fact that surveys show most R&amp;D executives do not see <a href="http://rdmanagement.blogspot.com/2010/05/quest-for-innovation.html">R&amp;D as driver of innovation</a>. &nbsp;May be some of these CxO statements are for public relations perspective, but still important to understand.<br />
<br />
The second important point Mr. Mullaly makes is that Ford will not form R&amp;D alliances. &nbsp;Sharing R&amp;D across multiple companies is a simple way to reduce R&amp;D costs near-term. &nbsp;Here is another article from MarketWatch discussion R&amp;D alliances (<a href="http://www.marketwatch.com/story/bmw-gm-still-talking-over-technology-cooperation-2012-03-06">BMW, GM still talking over technology cooperation</a>):<br />
<blockquote class="tr_bq">
BMW AG Chief Executive Norbert Reithofer confirmed Tuesday that the German car maker's cooperation projects with PSA Peugeot Citroen remain unaffected after the French peer last week forged an alliance with General Motors Co.. He added that cooperation talks between BMW and GM over "future technologies" such as fuel cells are still ongoing, but declined to elaborate.</blockquote>
As we have discussed in the past, automotive companies make a <a href="http://rdmanagement.blogspot.com/2010/05/car-makers-complex-web-of-alliances.html">complex web of alliances</a>. &nbsp;May be the Ford approach has some value considering the difficulty and cost of managing these alliances and maintaining IP rights across them.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-83987563604642645702012-03-04T15:37:00.000-08:002012-03-04T15:37:42.242-08:00How can R&D Management help exploit Thematic Similarity?The article&nbsp;<a href="http://sloanreview.mit.edu/the-magazine/2011-summer/52412/in-praise-of-dissimilarity/?utm_source=Publicaster&amp;utm_medium=email&amp;utm_campaign=New%20this%20month%20at%20MIT%20SMR&amp;utm_term=Read+more+">In Praise of Dissimilarity</a>&nbsp;from MIT Sloan Management Review has very important implications for R&amp;D management. &nbsp;The article describes how most managers view similarity based on functionality or product taxonomy (e.g solid state drives and hard drives are similar). &nbsp;However, another way to look for similarity is based on how different products interact in a scenario or event (e.g. shoes and mp3 players are related through exercise). &nbsp;This is called thematic similarity. &nbsp;The article points out that thematic similarity can help focus innovation and provide a competitive advantage. &nbsp;However, it also raises some important challenges for R&amp;D management. &nbsp;Lets dig in.<br />
<a name='more'></a>Traditionally similarity (taxonomic similarity) has been seen as a that based on overlap of functions and features:<br />
<blockquote>Whether explicitly or implicitly, the traditional understanding of “similarity” by managers has been a taxonomic one. Simply put, the degree of similarity as traditionally measured depends on the extent to which two objects possess the same features. Personal computers, for instance, all have hard drives, processors and a video monitor.<br />
...<br />
Thus, taxonomic similarity is based on the properties of the objects themselves, and taxonomic categories cohere around shared internal properties. As a consequence, taxonomically related concepts tend to resemble one another.</blockquote>Thematic similarity is probably as important but often overlooked:<br />
<blockquote class="tr_bq">...similarity is not just a matter of degree (how similar are two things), but also of kind (how are two things similar). Two things are thematically similar if they functionally interact in the same scenario or event. For example, an athletic shoe and an MP3 player are related through interacting in a workout theme, coffee and a computer interact in an office theme and a navigation system and a motor via an automobile theme. In each of these cases, the two things perform different roles.</blockquote>However, managers are trained to focus on taxonomic similarity and hence prone to ignore thematic uncertainty:<br />
<blockquote class="tr_bq">When managers ignore the thematic similarity hidden behind taxonomic dissimilarity, they risk overlooking opportunity (as well as misdiagnosing threat). <br />
...<br />
The behavioral theory of the business enterprise has long acknowledged managers’ dangerous tendency to search for opportunity in familiar taxonomic domains. </blockquote>The benefits of thinking thematically are pretty significant:<br />
<blockquote class="tr_bq">Thematic similarity opens up a new area of the dissimilarity space. While Google Maps and Yellow Pages are taxonomically similar services, another Google service, Google Voice Search, and GPS are clearly in taxonomically dissimilar categories. And yet there is a thematic similarity between the two in the context of using cell phones.</blockquote>Hence themes can actually help focus and direct long-term R&amp;D and innovation:<br />
<blockquote class="tr_bq">The new area of thematic similarity holds particular promise for innovation and opportunity search. Focusing on areas of taxonomic dissimilarity can help managers identify novel products or services that result from the combination of strategic assets that are taxonomically dissimilar but thematically related. </blockquote>As we have discussed many times, <a href="http://rdmanagement.blogspot.com/search/label/Innovation%20Management">innovation occurs at the intersection of technologies</a>. &nbsp;The more dissimilar the underlying technologies, more disruptive the innovation is likely to be. &nbsp;Thematic similarity provides a framework to bring normally dissimilar technologies together - and hence drive innovation:<br />
<blockquote class="tr_bq">This distant (in taxonomic terms) yet close search for opportunities created by thematic similarity provides a pragmatic guide to how (in which domains) strategists can find new potential for competitive advantage. </blockquote>The underlying problem is that R&amp;D&nbsp;management processes and cultures are developed around&nbsp;taxonomic similarity:<br />
<blockquote class="tr_bq">Taxonomic similarity underlies key frameworks of management such as strategic relatedness, the Standard Industry Classification (SIC) system, the definition of industry boundaries, including the forces within that industry, and the International Patent Classification (IPC). For example, the IPC category F02 (combustion engines) contains internal-combustion piston engines, gas-turbine plants, jet-propulsion plants and so on.</blockquote>May be we can extend some of the traditional tools such as brainstorming and focus them around themes:<br />
<blockquote class="tr_bq">Methods such as brainstorming, which aim at identifying such distant domains, are often referred to in the general management literature. For example, in an attempt to move beyond mere product extension, companies often encourage their developers to think “outside the box”</blockquote>But true exploitation of thematic similarity will require <a href="http://rdmanagement.blogspot.com/2010/06/management-innovation.html">management innovation</a>. We will need to develop new tools and processes to decide which thematic similarity to explore and how much to invest in it. &nbsp;One example provided by the article focuses on the integration of GPS technology with cameras. Thinking thematically, this would be pretty straight forward marriage. &nbsp;However, in reality, this very hard to do. &nbsp;The skills necessary to design cameras are very different form those required to design GPS receivers. &nbsp;Even if we can get the two technologists to brainstorm together, actual collaboration though workshops would be rather difficult. &nbsp;For managers, resource allocation for such development would be even more difficult. &nbsp;One approach would be to have detailed roadmaps that can be used to engender purpose driven communication between the two groups and portfolio balancing processes that effectively allocate resources for such activity.<br />
<blockquote>...consider an extreme case in which two products are so strongly associated that they are combined in one product but not thematically integrated. Many cell phones sport a camera function and a GPS function. However, the GPS and camera functions have not been integrated in most phones, despite sharing a thematic similarity: Many photos are about places, just as GPS is about places. Thematic integration links these two functions, allowing users to “geotag” the location at which a photo is taken. </blockquote>Another advantage of exploring thematic uncertainty is the ability to explore all potential competitors. For example, as the article points out Google did not see their business model as amenable to or at risk from social networking:<br />
<blockquote>Google only openly acknowledged the threat posed by Facebook on November 1, 2007, when it launched Open Social, Google’s own social networking platform. In other words, Facebook remained a noncompetitor for Google for more than three years and six months after Facebook’s launch. In fact, Google managers actively dismissed Facebook precisely because it did not fit Google’s taxonomy of activities. Google CEO Eric Schmidt said, “We have address books, and the sum of our address books is the social graph.” And it was not until February 9, 2010, that Google acknowledged the thematic similarity between social networks and e-mail by making a determined foray into exploiting the integration of social networking and e-mail by launching Buzz, a networking service that was closely integrated with its e-mail offering, Gmail.</blockquote>We will also need new strategic planning processes that can identify competitive threats from thematically similar firms. &nbsp;More importantly, we will need a better approach to evaluate those threats and find effective ways to respond to those threats. &nbsp;Finally, thematic similarity can be used to find acquisition targets. &nbsp;The article points out that Intel believes it acquired McAfee based on thematic similarities. &nbsp;The problem is that McAfee'sbusiness model is so different from Intel's that integration of the two will take a very long time.<br />
<blockquote>Actually, Intel and McAfee are remarkably similar thematically. According to Intel, the acquisition of McAfee would boost its strategy in mobile wireless, where it is beginning to produce chips for smart phones. Beyond smart phones, security is becoming a key requirement as new devices, from tablet computers and handsets to televisions and refrigerators, connect to the Internet. The purchase is therefore set to turn Intel, the world’s largest chip-maker, into a leader in security, extending its reach into Internet-connected devices.<br />
...<br />
While experts hope that chips can be improved to make them able to withstand malicious attacks, that prospect is seen as being years away.</blockquote>Even with time, I am not sure how easy or valuable this integration will be. &nbsp;May be there is a limit to how much taxonomically dissimilar firms can be before they can no longer be merged effectively. &nbsp;Furthermore, if integration is going to take many years, can we actually forecast how the market place will function at that time?<br />
A few more questions than answers, but still a very useful concept.Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0tag:blogger.com,1999:blog-6194977843764799641.post-62283225733006130892012-03-03T21:27:00.000-08:002012-03-03T21:27:47.573-08:00Apple's R&D portfolio strategy - "Get Rid of the Crappy Stuff" (Continued)I had been meaning to write about the article <a href="http://arstechnica.com/apple/news/2011/08/five-apple-products-steve-jobs-killed-for-the-good-of-the-company.ars">For the good of the company? Five Apple products Steve Jobs killed</a>&nbsp;from Ars Technica:<br />
<blockquote class="tr_bq">When Steven P. Jobs returned to Apple 1997, he returned to a slew of ill-conceived product lines. Some were excessive, and some were downright silly, but many were ultimately killed off for their poor alignment with consumer needs and wants. Still, even with Jobs’ discerning eye, he wasn’t immune to having to deal with a few bad product decisions.&nbsp;</blockquote>We discussed the Jobs' portfolio management methodology <a href="http://rdmanagement.blogspot.com/2011/01/apples-r-portfolio-strategy-get-rid-of.html">here</a>. I had mentioned that it is hard to make the right decision about what is crap. &nbsp;This prevents some leaders from making any decision at all. &nbsp;The idea should be to find failures early before a significant investment has been made. &nbsp;In fact, we should encourage some amount of risk taking in R&amp;D organizations to ensure that we are somewhat pushing the boundaries. &nbsp;The only way to ensure sufficient risks are taken is to see some projects fail and <a href="http://rdmanagement.blogspot.com/2010/06/rewarding-failure.html">rewarding failure</a>. &nbsp;Even Steve Jobs&nbsp;occasionally&nbsp;made bad product decisions. &nbsp;The only answer is to have a good <a href="http://rdmanagement.blogspot.com/search/label/Risk%20Management">risk management</a> process in place to catch failures. We also want to make sure we learn something from each failure so we can improve decision making for the future. So, here is an example of a bad product decision by Jobs:<br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://static.arstechnica.net/2011/08/25/apple_cube-4e5697b-intro.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="http://static.arstechnica.net/2011/08/25/apple_cube-4e5697b-intro.jpg" width="351" /></a></div><br />
<blockquote>The Power Mac G4 Cube, a computer suspended in a clear plastic box, was designed by Jonathan Ive and released in July 2000. The Cube sported a 450MHz G4 processor, 20GB hard drive, and 64MB of RAM for $1,799, but no PCI slots or conventional audio outputs or inputs, favoring instead a USB amplifier and a set of Harman Kardon speakers. The machine was known in certain circles as Jobs' baby.<br />
<br />
While Apple hoped the computer would be a smash hit, few customers could see their way to buying the monitor-less Cube when the all-in-one iMac could be purchased for less, and a full-sized PowerMac G4 introduced a month later with the same specs could be had for $1,599. Apple attempted to re-price and re-spec the Cube in the following months, but Jobs ended up murdering one of his own darlings, suspending production of the model exactly one year after its release. While the Cube's design is still revered (it's part of the MoMA's collection), it proved consumers won't buy a product for its design alone.</blockquote>Sandeep Mehtahttps://plus.google.com/102479512133603501251noreply@blogger.com0